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U.S.-Colombia Trade Promotion Agreement

Benefits for Agriculture
May 2011
The U.S.-Colombia Trade Promotion Agreement (Colombia TPA) is a key building block in the U.S. strategy to advance free trade within the Western Hemisphere. The agreement achieves two key trade objectives for the United States: it immediately provides vastly improved access to Colombia’s market, and it levels theplaying field with respect to third-country competitors in the Colombian market. Colombia is already an important market for America’s farmers and ranchers. In 2010, the United States exported $832 million of agricultural products to Colombia. Top U.S. exports were wheat, corn, cotton, soybeans, and corn gluten feed. Upon implementation of the Colombia TPA, U.S. exporters will receive immediateduty-free treatment on products accounting for almost 70 percent of current trade. Currently, no U.S. agricultural exports enjoy duty-free access to Colombia. Most Colombian applied tariffs range from 5 percent to 20 percent for agricultural products. In many cases, these tariffs restrict U.S. exports. Moreover, there is no assurance that Colombia will not raise tariffs to its permitted World TradeOrganization (WTO) limits (or tariff bindings), which range from 15 percent to 388 percent. Under the Colombia TPA, Colombia will immediately eliminate its price band system, which affects more than 150 products, including corn, rice, wheat, oilseeds and products, dairy, pork, poultry, and sugar. Under the current price band system, the tariffs on these products vary with world prices and may reach upto Colombia’s WTO bound rates. In 2010, Colombia finalized free trade agreements (FTAs) with Canada and the European Union, and is presently negotiating new FTAs with Panama and Korea. In addition, Colombia currently has FTAs in place with Chile, El Salvador, Guatemala, Honduras, Mexico, and Uruguay. It is also a member of the Andean Community Customs Union (Bolivia, Ecuador, and Peru) and is aparty to the MERCOSURAndean Community agreement, under which it has implemented bilateral agreements with Brazil, Argentina, and Paraguay. The United States is already paying a heavy price as a result of Colombia’s prevailing third-country arrangements, as the U.S. share of Colombia’s total agricultural imports fell from nearly 44 percent in 2007 to 21 percent in 2010. Should the United States notimplement the CPTA, further erosion of U.S. market share in Colombia is expected as that country’s existing and pending trade agreements with competitor countries take hold, leaving U.S. exporters in an increasingly disadvantaged position. KEY ELEMENTS OF THE AGREEMENT Market Access No products are excluded from the Colombia TPA. Liberalization of Colombia’s market will occur through tariffelimination for all commodities combined with zero-duty, tariff-rate quotas on commodities for which tariff elimination takes place over longer periods. The agreement immediately eliminates Colombia’s use of Andean Price Bands (variable tariffs), thereby ensuring that Colombia stops applying

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high duties resulting from the application of this mechanism. The United States will receive equal or preferential treatment vis-à-vis third-party competitors on all key products under the agreement. Tariff Elimination Colombia currently appliessome tariff protection on all agricultural products. Under the Colombia TPA, tariff phase-outs range from immediate duty-free access to a maximum phase out of 19 years. Tariffs on 77 percent of all agricultural tariff lines, accounting for more than 64 percent of current trade by value, will be eliminated when the Colombia TPA enters into force. Colombia will eliminate most other tariffs within 15...
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