U.S.-PERUVIAN FTA CREATES FAVORABLE ENVIRONMENT FOR U.S. CORN

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(Posted Tue. Apr 28th, 2015)

The U.S.-Peru trade promotion agreement has been instrumental in boosting bilateral trade in food and agricultural products since it went into force on Feb. 1, 2009, including spurring new sales of U.S. commodity corn, according to a U.S. Department of Agriculture Global Agricultural Information Network report released April 8.

“The increase in the export of U.S. corn to Peru provides another outstanding example of how free trade agreements can open markets, creating real opportunity for America’s corn farmers,” said John Linder, an Ohio farmer who chairs the National Corn Growers Association’s Trade Policy and Biotechnology Action Team. “With NCGA pushing for policies like Trade Promotion Authority and favorable trade agreements and, once those policies are in place, USGC building markets abroad, the possibilities for farmers are growing by the day. These markets not only help build demand for U.S. corn but also support American jobs and benefit the U.S. economy as a whole.”

This marketing year alone, Peru has outstanding sales and accumulated exports of more than 75 million bushels of U.S. corn as of April 16, compared to only 43 million bushels last year at the same time.

“The U.S. Grains Council has been particularly active in Peru promoting U.S. corn for the past several years,” said USGC Regional Director for the Western Hemisphere Marri Carrow. “Peruvian buyers are becoming more sophisticated in purchasing grains but have indicated they have a preference for U.S. corn. This trade agreement is a great example of how reducing trade barriers to create mutually beneficial trade partnerships increases opportunities for U.S. products.”

Currently, two-thirds of U.S. farm exports to Peru receive duty-free treatment. U.S. corn still has a tariff rate quota of 27.9 million bushels, which was filled within the first week of 2015. While this TRQ is in the process of being phased out over the next nine years, sales of U.S. corn are continuing because of the PTPA.

“With last year’s drop in agricultural commodity prices, the price ban system was activated,” Carrow said. “Due to Peru’s PTPA commitments, it could not fully assess the variable levy mandated by the price ban system against U.S. corn. This gave U.S. corn an advantage over corn sourced from other suppliers, including Argentina and Brazil.”

Building on this advantage, the Council is engaged in Peru to further expand U.S. corn exports. Moving forward, USGC staff will continue face-to-face meetings with Peruvian clients, like they did when presenting the 2014/2015 Corn Harvest Quality Report’s findings earlier this year, and providing market education in order to promote the advantages of U.S. corn.

The job of removing barriers to global grain trade isn’t done, as two key multilateral trade agreements – the Trans-Pacific Partnership and Trans-Atlantic Trade and Investment Partnership– are now being negotiated. These trade agreements would provide a similar benefit to U.S. farmers as the PTPA on a larger scale by easing barriers to free trade in multiple countries in Asia and Europe.