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Trade Issue Brewing with Panama

The U.S. Grains Council says an unsettling trade barrier is brewing in Central America. The Panamanian government has published the regulations governing quota administration for powdered milk, rice and corn - which are all governed by the auction system as part of the Panama-U.S. Trade Promotion Agreement. According to the Grains Council - Panama's government has exploited a loophole in the agreement and closed the imports of U.S. corn for three and-a-half months at the beginning of 2014. The Council immediately began working with the U.S. Trade Representative, USDA's Foreign Agricultural Service in Panama, the Panamanian government and the Panamanian poultry industry to find resolution. While the hope is to resolve the issue informally - the Grains Council notes key employees of the USTR and FAS-Panama are unable to do their job in keeping markets open for U.S. products because of government furloughs.

Panama produces approximately 85-thousand metric tons - or 3.3-million bushels - of corn annually. They import 350-thousand tons - or 13.8-million bushels each year. The Panamanian government has historically closed the market each year to imports from January to April - but the Grains Council says it was believed that under the FTA - this pattern of closing the market would no longer be acceptable. The market was not closed for corn imports in 2013. USGC Director of Trade Policy and Biotechnology Floyd Gaibler says the time period the government has chosen to close the market coincides with the harvest of the local corn crop and is an obvious effort to subvert the FTA in order to protect local corn producers and force the Panamanian feed industry to buy local corn. He says the regulation goes against the spirit of the FTA and creates a tremendous burden on the local livestock industry. Gaibler says the FTA was intended to simplify trade - but the Panamanian government has set up several technical barriers which make the situation worse for the feed industry, increasing the cost of importing U.S. corn and actually making U.S. corn less competitive.

The Grains Council will actively pursue this issue despite the government shutdown. The Council says this issue highlights the importance of USDA and USTR to the agricultural community in helping to protect and enforce existing trade agreements.

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