(Posted Mon. Dec 16th, 2013)
Dec. 16: Timely action by the U.S. Grains Council, the U.S. Department of Agriculture and the U.S. Trade Representative averted a patently protectionist seasonal market closure in Panama, keeping this important market open for U.S. corn exports.
“U.S. corn farmers increasingly understand the importance of working diligently to maintain all markets for our product both at home and abroad,” said National Corn Growers Association Trade Policy and Biotechnology Action Team Chair Jim Zimmerman. “The determined efforts of farmers, through the Council, and of our government have resulted in a real victory that will allow this valuable market to remain open and for U.S. corn exports to stay on track.”
In September, the Panamanian government published regulations governing quota administration for U.S. corn imports under the Panama – U.S. Free Trade Agreement. Unfortunately the Panamanian government decided to exploit a loophole in the FTA and closed the imports of corn from January through April 15, 2014 in a move that was counter to the spirit of the agreement. This time period coincides with the harvest of the local corn crop and was viewed as an effort to subvert the FTA in order to protect local corn producers and force the Panamanian feed industry to buy local corn.
The Grains Council, of which the National Corn Growers Association is a founding member, alerted the USDA and the U.S. Trade Representative's office of this move and outlined how this action restricted and was burdensome to trade between Panama and the United States. Despite being shorthanded due to the ongoing furlough of vital staff during the U.S. government shutdown, U.S. government officials sprang into action. As a result of the combined efforts of the Council, Panamanian industry and the U.S. government, the Panamanian government issued a new resolution removing any restrictions on U.S. corn imports in 2014.
Under the FTA, Panama will import 12.4 million bushels of U.S. corn in 2014 with an export value of approximately $63 million. The Panamanian livestock sector imports more than 9.8 million bushels of U.S. corn per month to feed their growing poultry and swine sectors. Pro-rated for the period of the proposed Panamanian market closure, the proposed restrictions would have impacted more than 3.1 million bushels of corn imports with an estimated export value of $16 million.
This resolution ensures that U.S. corn producers and exporters will be able to participate in the benefits provided by the FTA between the United States and Panama. It also comes at a critical time as U.S. corn exporters begin to recapture lost market share in Panama with a record U.S. corn crop that is beginning to enter export channels.