Central America Poultry Export Quota

The U.S. Congress passed the U.S-Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) in July 2005 and President Bush signed the legislation to implenent the DR-CAFTA in August, 2005. Under the agreement, each country was to provide immediate duty-free access on chicken leg quarters through countryspecific tariff-rate quotas (TRQs) that expand annually as duties are eliminated over a 17 to 20 year period. El Salvador, Guatemala, Honduras and Nicaragua were to establish a total initial regional TRQ of 21,810 MT. For the first two years, exports will be restricted to Guatemala and any chicken leg quarters over quota will face a 164 percent tariff.

On January 30, 2006, the U.S. Department of Commerce issued an Export Trade Certificate of Review to Central America Poultry Export Quota, Inc, (CA-PEQ). CA-PEQ was formed jointly by the USA Poultry and Egg Export Council (USAPEEC) on behalf of the U.S. poultry industry; by Asociacion Nacional de Avicultores de Guatemala (“ANAVI”) on behalf of the Guatemalan poultry industry; by Asociacion Nacional de Avicultores de El Salvador (“AVES”) on behalf of the Salvadoran poultry industry; and by Asociacion Nacional de Avicultores y Productores de Alimentos de Nicaragua (“ANAPA”) on behalf of the Nicaraguan poultry industry. This Certificate protects CA-PEQ, members, and their directors, officers, and employees from certain private actions and from government criminal and civil suits under U.S. federal and state antitrust laws for the export conduct specified in the Certificate.

CA-PEQ will contract with a neutral third party Administrator who is not engaged in the production, sale, distribution or export of poultry or poultry products and who will bear responsibility for administering the TRQ System, subject to general supervision and oversight by the Board of Directors of CA-PEQ. At least three times each year, CA-PEQ will offer TRQ Certificates for duty-free shipments of chicken leg quarters exclusively through an open tender process with certificates awarded to the highest bidders. The award will be determined solely by the Administrator in accordance with Section I of the Terms and Conditions of Certificate, without any participation by the Board of Directors. The certificate covers chicken leg quarters, (or parts of chicken leg quarters, including legs or thighs), fresh, chilled or frozen, seasoned or unseasoned, marinated or not marinated, classifiable under HTS 0207.13.99, 0207.14.99 and 1602.32.00, for export to El Salvador, Guatemala, Honduras and Nicaragua.

A notice of each open tender process will be published in the Journal of Commerce and, at the discretion of the Administrator, in other publications in general circulation within the U.S. poultry industry. The Notice will specify the total amount (in metric tons), the shipment period, the date and time by which all bids must be received, and a minimum bid amount per ton, as established by the Board of Directors, to ensure the costs to administer the auction are covered. The bidder must submit a performance bond in the amount of $50,000 with each bid, or the total value of the bid, whichever is less.

After the issuance of the all TRQ Certificates from an open tender, the Administrator will publicly disclose the total tonnage for which TRQ Certificates were awarded and the lowest price per metric ton of all successful bids. The TRQ Certificates are transferable except that such intention must be published on a Web site maintained by the Administrator at least three business days prior to any sale and the TRQ holder must provide the Administrator with a copy of the transaction.

The Administer will pay all operation expenses from the tender proceeds and half of any funds remaining at the end of the year will be distributed to fund export market development and other projects to benefit the U.S. poultry industry and the other half will be distributed to fund export market development and other projects to benefit the poultry industries of El Salvador, Guatemala, Honduras and Nicaragua. Source: Federal Register, US Trade Representative, USDA/FAS, US State Department USINFO, news wires

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Source: USDA's Agricultural Marketing Service - 21st February 2006