U.S. Wheat Associates (USW) says President Obama’s recent visit to Brazil, Chile and El Salvador highlighted the special trade relationship that the U.S. shares with its Latin American neighbors. For example, Latin America accounted for more than 7 million metric tons (mmt) of U.S. wheat exports in 2009-2010, roughly one-third of all U.S. wheat exports that marketing year.
In Brazil, the two governments signed a trade and economic cooperation agreement (TECA). This agreement establishes a U.S.-Brazil Commission on Economic and Trade Relations, which will work to reduce barriers to trade and promote economic growth. TECAs are often the first step in the process of exploring and negotiating free trade agreements (FTAs).
USW says the U.S. wheat industry would welcome increased trade opportunities with Brazil, which is the largest importer of wheat in the region with potential to be a substantial market for high quality U.S. wheat. Argentina is currently the main provider of wheat to Brazil because of geography and preferential trade arrangements provided by the Mercosur agreement. The Mercosur common market only formally includes Argentina, Brazil, Paraguay and Uruguay. However, the agreement affects free trade for almost all of South America as most countries in the region are associate members with preferential access for goods produced in other Mercosur countries.
The U.S.has already seen the benefits of free trade agreements with Latin American countries. The U.S. and Chile have enjoyed the benefits of an FTA since 2004 and U.S. wheat exports to Chile grew from just 42,000 metric tons (mt) in 2001-2002 to as much as 446,000 mt in 2008-2009.
The Obama Administration highlighted the benefits of trade in a White House Joint Statement during the stop in Chile: "Both presidents underscored that in the seven years since the U.S.-Chile FTA first entered into force, not only have the conditions of exchange of goods and services improved, but also new business opportunities have been formed, leading to the diversification of products and a greater access for agricultural products."
Implementation of the U.S.-Colombia FTA is another critical step in expanding the U.S.-Latin America trade relationship. The Colombian Constitutional Court finished its review of the Colombia-Canada FTA in late March and ruled that it is consistent with the Colombian Constitution. This paves the way for both countries to implement the agreement by early July. If the USW fails to ratify the U.S.-Colombia agreement soon, U.S. wheat producers stand to lose substantial market share.
Latin America is a valued trading partner, and USW will continue working to help level the playing field so that U.S. wheat can compete there on the basis of quality and value.