Ratification last year of the U.S.-Colombia Free Trade Agreement (FTA) is an important step forward, but trade liberalization is an ongoing process, not an event. Sorghum exports to Colombia provide a timely example.
"The first job right now is to implement the FTA," said Kevin Roepke, U.S. Grains Council manager of international operations. "But that's just a start. Changing trade dynamics are creating new opportunities for sorghum even before the new FTA has been fully implemented."
The U.S.-Colombia FTA established a Tariff Rate Quota (TRQ) providing for duty-free imports beginning at 21,000 tons (827,00 bushels) of U.S. sorghum to Colombia in year one and unlimited quantities after year twelve. This opportunity helps to open the door to future progress. But that won't happen automatically.
"Colombia has the potential to be an important market for the U.S. sorghum industry," said Kurt Shultz, USGC regional director in Latin America. "The Council will be engaged with Colombian companies to fill the quota and possibly more to try to build the market."
The five-year delay in ratification of the FTA dampened U.S. feed grains exports to Colombia – while Argentina rapidly gained market share. At the same time, the Colombia supply-demand picture for sorghum was changing. Immediately following FTA negotiations, Colombian sorghum imports began to soar, increasing from less than 1,000 tons (39,000 bushels) in 2007 when the TRQ was first negotiated, to 471,000 tons (18.5 million bushels—USDA/DIAN figures) last year when the FTA was ultimately ratified. This tremendous surge in demand highlights the need for a continuously evolving trade policy strategy when dealing with free trade agreements.
"This is a price-driven market," Roepke noted, "and right now, Argentina dominates it. However, U.S. sorghum is tannin-free, and therefore commands a premium to Argentine sorghum. The Council is hosting a team of large Colombian importers to visit the United States to gain valuable, firsthand knowledge of the U.S. sorghum industry and educate them on the tremendous opportunities that lie ahead.
"The United States continues to have an inherent shipping advantage to Colombia, so there are potential opportunities here." Roepke added. "For sorghum, this is currently an Argentine market. The Council is in constant contact with Colombian buyers to alert them to new opportunities."