North Dakota Wheat Commission State MeetingDecember 2010

Trade Policy Overview

• WTO / Doha

• Free Trade Agreements

• Irritants

• Priorities

• Reliability

153 Members – International rules of trade

World Trade Organization

• Showing signs of progress– Is 2011 the window to conclude ???– 2012 is US election and farm bill– 2013 is EU agricultural reform– Small Group Meetings at Ambassador level– US bilateral discussions

• Timeline guidance for 2011– Draft Text 1st Quarter, Final Text 2nd Quarter– Scheduling text and sign 4th quarter

World Trade Organization

• Agriculture negotiations– Market Access

• Special safeguard and sensitive products • More assurance on market access for trade off in supports

– Elimination of export subsidies• No longer being used by most countries; makes it permanent

– Disciplines on State Trading Enterprises• Trade distorting behavior

– Domestic support caps reduced• Current negotiated levels look alright; • Revenue assurance programs

World Trade Organization

• Disciplines to eliminate trade distortion– Eliminate all forms of export subsidies

– Eliminate government financing & preferential access to capital or other special privileges through government guarantees

– Eliminate government underwriting of losses

– Other WTO members allowed to request information on exports, volume, price and destination

– Annual notifications on operations

World Trade Organization• Benefits – Past WTO agreement

– Farm gate price and exports increased

Free Trade Agreements

• Colombia– Canada ratified in June 2010– Colombia’s Constitutional Court expected to ratify last

section of Canadian agreement in December 2010– Implementation likely in first half of 2011– U.S. signed in 2006 – labor issues– Pushing for tariff elimination via other channels

• Panama– Tax Information Exchange Agreement

signed. Labor issues being worked out• 90% market share

Free Trade Agreements

• Korea– Negotiations continue – priority for administration

• Mainly autos, but other issues remain as sticking points• Top 10 US customer - small duty on wheat to be eliminated

– Ratification will be a strong signal to the entire world• Especially for Doha, TPP, and other pending FTAs

– EU signed agreement on October 6 – expects all approvals and implementation July 2011

• Australia finished 5th round of talks in May 2010• Canada negotiating

Free Trade Agreements - TPP

• TransPacific Partnership– Malaysia has joined the 8 other countries

• US, Peru, Chile, N. Zealand, Australia, Singapore, Vietnam, Brunei

– Interest to be a larger agreement (Asian Pacific Economic Cooperation – APEC):

• Japan, Canada, Thailand, Taiwan, Philippines, S. Korea, and others

– Talks continue this week

Free Trade Agreements

• Morocco– 2010 was a better year for filling TRQs

– Common wheat TRQ mostly filled – 300,000 MT from total of 330,000 MT for 2010

– Durum TRQ unfilled• No sales on roughly 290,000 MT durum quota for 2010• Quota increases 10,000 metric tons each year and duty is

phased to zero

– Currently no preference as no duties in place on durum or common wheat

Brazil

• WTO Case

Brazil - WTO Case

• Joint communication signed between U.S. and Brazil – avoided 30% tariffs– Not a mutually agreed solution– Parameters for discussion on domestic support of

cotton and reviews of the GSM-102 program– Consultations to be held at least four times per year– After enactment of the new farm bill, the U.S. and

Brazil will consult to determine whether a mutually agreed solution has been reached

Brazil – WTO Case – Why Wheat?

• GSM-102 Program– Annual allocations announced in two equal

installments (beginning and mid FY) – reviewed– Adjustments in fees and tenors

• Over $1.3 billion – increase fees by 11%• Over $1.5 billion – increase fees by 15%• <$800 million – decrease fees by 50% of last increase• 16 month maximum average tenor

– Wheat is a major user of GSM• $693 million in 2008/09 of $5.3 billion • $524 million in 2009/10 of $3.1 billion

• U.S. Wheat Associates Efforts– Wheat was major commodity on retaliation list– Duties to increase to 30%

• Increased price of over

$40 per metric ton (>$1/bu)

– Conducted meetings with ministries

making decisions on new tariffs and

with industry to remove wheat from the list• Made economic argument on volatility in

supplies from Argentina, Paraguay and Uruguay

– Joined Brazil-US Business Council • Cooperate with cross section of industry

*Exports over 400 TMT in 2010 to date

Brazil – WTO Case – Why Wheat

Trade Irritants

• Mexico Trucking – Retaliation to ending the trucking program in 2009– Carrousel duties could impact wheat– # of products increased to 99 (54 agriculture)– $2.5 billion in products (68% agriculture)

• Algeria Reference Price on Durum– Impacts private durum imports – loyal customers

Other Priorities

• Cuba– Continue to push for normalized trade– Travel ban and payments– HR 4645

• Monitoring and Enforcement– Domestic subsidy spending, etc.

• Flour Exports from Turkey– Lost market share in S. Asia

“No Tax or Duty shall be laid on Articles exported from any State.”

U.S. Constitution,

Article I, Section 9,

Clause 5

U.S. Reliability

Agricultural Embargoes and Contract Sanctity

Food Security Act of 1985:

Declares U.S. policy to encourage agricultural exports and not to restrict exports except under the most compelling circumstances.

The Food, Agriculture, Conservation, and Trade Act of 1990:

Contracts to export agricultural commodities, which were agreed upon before any prohibition, should not be abrogated.

Export Administration Act of 1999:

Prohibition on agricultural exports can only be imposed when the President declares a national emergency. (high prices do not qualify)

Questions

www.uswheat.org