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Dairy Facts 2016
 
 

U.S. Signs Separate Trade Agreements with Colombia, Russia

Dec 04, 2006

U.S. Signs Separate Trade Agreements with Colombia, Russia

The United States signed separate trade agreements with Colombia and Russia last month, paving the way for increased exports of U.S. dairy products to enter these countries duty free or with much lower tariffs. Last year, U.S. dairy exports to Colombia totaled approximately $5.5 million, and have already reached $3.5 million in the first half of 2006. Similarly, U.S. dairy exports to Russia last year totaled nearly $5 million, with lactose accounting for the majority of exports.

"We're pleased with the signing of these trade agreements," said Clay Hough, IDFA senior vice president. "Colombia presents an excellent market for a wide variety of dairy products, and U.S. exports of whey, cheese and ice cream to Russia will benefit from the lower tariffs."

The United States signed the free trade agreement (FTA) with Colombia to strengthen economic ties and expand trade between the two countries by eliminating tariffs and other barriers to goods and services. Both countries now must submit the agreement to their legislatures for approval.

Colombia currently benefits from the Andean Trade Preference Act (APTA). As a result, a majority of Colombia's exports already enter the United States duty-free, but that act is set to expire at the end of December. In 2005, the United States was Colombia's chief trading partner, with two-way goods trade between the two nations totaling $14.3 billion.

Once the free trade agreement is implemented, Colombia will immediately eliminate tariffs on nearly 82 % of U.S. industrial goods and phase out the remaining 18% over 10 years. U.S. exporters will gain immediate duty-free, quota-free access for whey and lactose exports as well as increased quotas for cheese, ice cream and processed dairy products.

U.S. companies also will be allowed to import an additional 50,000 metric tons sugar under the agreement. Colombia currently is permitted to export at least 25,000 metric tons of sugar under World Trade Organization (WTO) rules.

The agreement still faces obstacles, however, because passage by U.S. legislators is not guaranteed. Several members of Congress have said they will not vote in favor of the agreement unless it is amended to include more safeguards for labor rights and the environment. They also expressed concern that higher imports of Colombian sugar might threaten U.S. sugar producers.

The United States and Russia signed a bilateral market access agreement on November 19, moving Russia closer to its 13-year goal of joining the World Trade Organization (WTO). As part of the deal, Russia has pledged to cut agricultural import tariffs, which will improve access to its nearly $1 billion export market for U.S. agricultural products, including dairy.

Before the WTO can vote to endorse Russia's membership, however, the country must first consolidate the bilateral agreements it has with 57 WTO member countries into multilateral agreements. Also, the WTO member countries of Georgia and Moldova have threatened to block Russia's bid to join because Russia has barred key exports from their nations.

While Georgia currently poses the biggest threat to Russia's accession hopes, the U.S. Congress must pass legislation that would grant permanent normal trade relations (PNTR) to Russia. Russia, like Vietnam, is still restricted by the 1974 Jackson-Vanik amendment, which denies most-favored nation status to any country that does not permit free emigration. Prospects remain unclear as to when and whether the Russia PNTR vote will pass in Congress.

Last month, the U.S. House of Representatives failed to pass legislation that would grant PNTR to Vietnam, putting the dairy industry's hopes for increased trade access and lower tariffs on dairy exports to that country on hold. Although the legislation will be considered again this month in the House, it also must be approved by the Senate, where it faces opposition as well.

For more information on these trade agreements, contact Helen Medina, IDFA manager of international affairs, at hmedina@idfa.org.

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Posted December 4, 2006

 
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