Since trade is a all over the news lately (while Congress debates/argues/discusses Trade Promotion Authority and Trade Adjustment Assistance) it seems like the right time to help you understand just how important trade is.
Trade Promotion Authority (TPA) basically allows President Obama to negotiate free trade agreements. Congress then gets to vote yes or no on the deal he’s negotiated.
COLOMBIAN FREE TRADE AGREEMENT
One free trade agreement that has hugely benefited Illinois in the last couple of years is the Colombian Free Trade Agreement. This agreement was passed by Congress in October 2011 and effective in May 2012.
Since that time, trade with Colombia is booming. Colombia is importing a similar amount of U.S. corn in the first four months of this calendar year as last year and will likely exhaust its duty-free quota soon. This is in stark contrast to just two years before when only 18,500 metric tons (728,000 bushels) of U.S. corn were imported by Colombia from January to April 30.
This large increase in the past two years was made possible by both greater availability and the U.S.-Colombia free trade agreement (FTA).
The FTA gives U.S. corn imports up to 2.43 million tons (95.6 million bushels) duty-free treatment, which has been advantageous so far this year. U.S. corn will likely continue to see a price advantage over other competitors even when the country is forced to import outside the duty-free treatment. The quota increases 5 percent every year until 2024 when U.S. corn will not have a duty to enter Colombia.
THAT’S A LOT OF NUMBERS. WHAT’S IT MEAN TO ME?
For the average Illinoisan, this means significant economic stimulus in Illinois. (Do I have to remind you that we are in desperate need of economic stimulus?!)
Illinois corn is a natural to ship to Colombia. We have easy access to the Mississippi River and from there, easy access to Colombia. We also have a plethora of the golden goodness that Colombia needs. And the price is right because of the duty free status.
Extra money in Illinois means more money changing hands, more jobs, more of everything. And while trade can’t fix Illinois’ problems over night, it certainly doesn’t hurt.
BUT I’M NOT FROM ILLINOIS!
Trade is good for ALL Americans. Free trade agreements are often really beneficial for trading farm products like commodity corn or meat because that’s what America is good at, but also includes other stuff from the manufacturing sector. Products leaving America, no matter the product, is good for Americans.
Even farm products leaving Illinois benefits the rest of the country as Illinois citizens buy products from other states and barge and rail employees benefit from the increased traffic.
Also important to note: if Illinois is absent from trade negotiations with other countries, they’ll enact their own free trade agreements without us, leaving America at a disadvantage. We really can’t afford to miss out on the economic benefits that trade provides.
DO YOU HAVE QUESTIONS OR COMMENTS ABOUT TRADE?
I would love to chat with you about them in the comments!!
ICGA/ICMB Marketing Manager