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Summary

The 111th Congress in coming months might take up free trade agreements (FTAs) signed by the Bush Administration with Colombia, Panama, and South Korea under trade promotion authority, or fast-track rules, designed to expedite congressional consideration of these agreements. Liberalizing trade in agricultural products, particularly the pace of expanding market access for the more sensitive agricultural commodities, was one of the more difficult areas that trade negotiators faced in concluding each of these FTAs. In each instance, issues dealing with food safety and animal/plant health matters (technically not part of the FTA negotiating agenda) were not resolved until later. While U.S. negotiators sought to eliminate high tariffs and restrictive quotas to U.S. agricultural exports to these three country markets, they also faced pressures to protect U.S. producers of import-sensitive commodities (beef, dairy products, and sugar, among others). FTA partner country negotiators faced similar pressures. One Bush Administration policy objective was for FTAs to be comprehensive (i.e., cover all products). For the more import-sensitive agricultural commodities, negotiators agreed on long transition periods, temporary additional protection in the case of import surges, or indefinite protection of a few commodities. To illustrate the latter, because of political sensitivities for the United States or its partners, negotiators agreed to retain in perpetuity quantitative import limits and prohibitively high tariffs on some of the most import-sensitive commodities. In one exception, though, the United States agreed to Koreas insistence that rice be completely excluded from their FTA. Of these three, the FTA with South Korea would be the most commercially significant one for U.S. agriculture since the North American Free Trade Agreement (NAFTA) took effect with Mexico in 1994. Because Colombia is a large market that imposes a high level of border protection on agricultural imports, the Colombia FTA has the potential to significantly increase U.S. agricultural exports. Though Panama represents a relatively small market, U.S. exporters would have numerous opportunities for additional sales. Conversely, each pending FTA partner would have additional access to the U.S. market for those agricultural commodities that are now protected by restrictive U.S. import quotas. Of these, the U.S. sugar sector would face competition from increased imports of sugar from Colombia and Panama. The small increase in additional imports from South Korea would likely be primarily ethnic foods. Also, because these three countries consume most of the beef and dairy products that they produce, any additional sales would likely be accommodated by the large U.S. market with little effect. The Obama Administration has signaled its intent to address outstanding issues of concern to some Members of Congress in order to submit the Panama FTA to Congress for consideration, possibly later this year. With respect to the Colombia and South Korea FTAs, officials have stated their intent to work with Members of Congress to develop benchmarks to use to determine when these agreements might be sent to Capitol Hill for debate. This report will be updated to reflect developments.

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