A Bridge Opens Between The US And Peru

US - President Bush is expected to sign the Peru Trade Promotion Agreement (PTPA) into law.
calendar icon 5 December 2007
clock icon 4 minute read

The National Corn Growers Association (NCGA) has applauded the decision.

"Today's vote is a victory for the United States and Peru," said NCGA President Ron Litterer. "NCGA thanks the Senate for recognizing the importance of leveling the trade playing field with Peru. Corn growers nationwide look forward to the new export opportunities."

Last month, the House of Representatives approved the Peru Trade Promotion Agreement in a 285-132 vote.

The PTPA will eliminate barriers to goods and services and promote economic growth. The agreement also provides reciprocal access for American farmers and ranchers, as many of Peru's agricultural products have little or no tariffs upon entry into the U.S. through the Andean Trade Preference Act.

Under the Peru FTA (free trade agreement), corn growers can expect a penny per bushel increase in price which would amount to $100 million dollars on a 10 billion bushel crop. In addition, the increased demand in beef, pork and poultry converted into bushels of corn will likely mean another one-half cent. The Peru FTA also improves U.S. corn growers' ability to compete with regional competition such as Argentina.

Acting Agriculture Secretary Chuck Conner said: "I appreciate the Senate's overwhelming passage of the U.S.-Peru Trade Promotion Agreement (TPA), which will allow our two countries to begin implementing and fulfilling two-way market access for our agricultural goods. U.S. agriculture has been a staunch supporter of the Peru Trade Promotion Agreement because it creates new opportunities for U.S. products that currently face high tariffs to enter the Peruvian market.

"It is important for Congress to continue the process of leveling the playing field for our producers, eliminating restrictive tariffs on U.S. exports, and allowing the strengths of American agriculture to shine through by moving forward with the Colombia, Panama and Korea trade agreements.

"The Peruvian middle class is growing rapidly, and the future of U.S. agricultural growth depends on gaining access to these newly affluent demographic sectors. In fiscal year 2007, U.S. exporters sold nearly $333 million in agricultural products in Peru and our agricultural producers stand ready to provide an expanding range of high-value and consumer-ready products to this emerging market. The agreement will also help to keep U.S. bulk commodities competitive in the Peruvian market. On the first day the agreement goes into effect, 90 percent of our food and agricultural products will enter Peru duty free, greatly increasing the competitiveness of U.S. goods.

"However, U.S. agriculture is not the only beneficiary of the agreement. The Peruvian economy will gain from enhanced investment opportunities, and Peruvian agriculture will enjoy greater participation in the global marketplace. The resulting job creation in Peru's agriculture sector will support U.S. and Peruvian counter-narcotics efforts. Increased prosperity for Peru promises a stable government, a stalwart trading partner, and democratic presence in South America."

Currently, Peruvian import duties on corn are bound at 30 percent, with an applied rate of 12 percent. Upon implementation, the FTA provides for immediate tariff elimination under a 500,000 metric tons (19.7 million bushels) corn tariff rate quota (TRQ); in year 10, the TRQ would be increased to 844,739 metric tons (33.2 million bushels); in year 12, the TRQ would be eliminated.

Peru is an important potential market for corn's value-added products, such as distiller's dried grains (DDGS). DDGS is currently bound at 0 percent. NCGA estimates that U.S. DDGS production will reach over 30 million tons by marketing year 2010-11.

NCGA is a member of the Agriculture Trade Coalition that supports the PTPA.

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