The Obama administration’s trade agenda got off to a slow start. Take the three pending free trade agreements (FTAs) with Colombia, Panama and South Korea — all of which have been on the back burner for the past several years. While other countries have signed extensive trade agreements with these three nations, the United States has been left out of the game. As a result, global markets and U.S. jobs are being lost. The administration and Congress are finally realizing that this is not acceptable.
As the focus in Washington shifts to trade, the U.S. rice industry is eager to move forward and maximize the benefits of the U.S.-Colombia FTA. This agreement, in particular, is the most favorable for U.S. rice of all the pending FTAs. The United States concluded the trade agreement with Colombia in June 2007, establishing an initial 79,000 metric ton (milled basis) tariff-rate quota (TRQ) for all types and forms of U.S. rice. The duty on imported rice is 80 percent now, but within the TRQ, it will be zero. The amount of the TRQ will increase over time and will end 19 years after the FTA goes into effect. At that time, all U.S. rice imports into Colombia will be duty-free.
The agreement with Colombia offers tremendous short- and long-term economic benefits to U.S. rice producers, millers and exporters. The greatest achievement of this agreement is the requirement that the rights to import U.S. rice duty free into Colombia under the TRQ be auctioned off and that this revenue (minus administrative expenses), or “quota rents,” be split evenly between U.S. and Colombian industries. The vehicle to auction and distribute revenue is called an export trading company (ETC), which is a private entity with a board of directors set up under U.S. statute. In the case of rice trade with Colombia, the ETC board of directors would consist of members of the U.S. and Colombian rice industries.
USA Rice Federation has proposed that the U.S. share of all net revenue from the TRQ be dedicated to the state rice research boards in the six producing states (Arkansas, California, Louisiana, Mississippi, Missouri, and Texas), based on each state’s five-year Olympic average of production of rough rice. The funds would be used exclusively for rice research.
Ahead of the curve
Funding rice research will better position the industry to stay ahead of the curve, and with funding from state and federal entities threatened by today’s federal budget environment, the U.S. rice industry must make it a priority to adequately fund much needed rice research. New and innovative research is costly, but the challenges facing the industry, natural or regulatory, are increasing. Each of the six rice-producing states conducts research in rice breeding, soil and water management, and weed and insect control, among other work. Their efforts have been largely responsible for boosting rice yields significantly in the past 20 years.
Whether it involves developing new rice varieties, or sustainable on-farm practices, rice research starts at the production level. Rice’s cost of production is high. Therefore, farmers cannot be successful if they do not have the fundamentals afforded by the rice research boards to produce a high-yield crop that can compete in the global marketplace.
Congressional approval and passage of the U.S.-Colombia FTA this year is essential if the United States expects to achieve the goals set out by the president in the National Export Initiative of doubling exports and creating 2 million new U.S. jobs in five years. Furthermore, the Canada-Colombia trade agreement is expected to enter into force this year, as is Colombia’s agreement with the European Union. The United States can no longer afford to be left behind.