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NBGA Trade Policy Priorities

Export Subsidies & Competition

EU export and domestic subsidies have had the greatest direct impact on US barley profitability in recent years.  Although not used in 2000/01 and 2001/02, the EU subsidized more than 11.7 MMT of barley onto the world market in 1999/2000 at subsidy rates as high as $43/MT (August 1999). They restarted barley export subsidies in May 2002 and have subsidized more than 1 MMT at a subsidy level of 5-12 euro per metric ton.   

The EU has the authority within the Uruguay Round Agreement to subsidize up to 10.8 MMT of coarse grain exports annually.  Under the URA rules, the EU could easily return to an aggressive barley subsidy regime if domestic production were to skyrocket and surplus supplies accumulate, or if the value of the euro were to gain on the US dollar.

In MY 2002-03, the EU produced about 36% of the world’s barley and controlled 31% of world barley exports.  This large barley production base remains essentially isolated from world supply and demand fundamentals and market signals. 

Overall, the EU spends more than $7 billion on ag export subsides annually, accounting for 85% of all ag export subsidies in the world. 

State Trading Enterprises

In a typical year, nearly one-third of world barley trade will be handled by monopoly export boards in Canada and Australia.  These boards operate basically without price risk in the marketplace, allowing them to engage in discretionary pricing that has a similar affect to export subsidies in highly competitive global markets.   

The ability of these STEs to undercut competition through price and freight pooling, without concern for profit or loss on individual transactions, results in market inefficiencies, distorts trade and lowers prices for all barley producers. 

We must insist that STEs operate at risk of the market, relinquish their monopoly powers, provide price and volume transparency in export sales and price commodities based on their full acquisition or replacement cost.  STE marketing activities must be subjected to major reforms, including the elimination of monopoly powers.

Market Access

Agricultural tariffs are bound at rates averaging 62% around the world, while US tariffs on ag imports average only 12%.  This disparity is even more dramatic for barley: average world tariffs of 79% compared to US tariffs of only 1%.  This wide disparity puts all US ag producers at a tremendous disadvantage and causes a particular hardship in many import-sensitive sectors.  The US must tackle market access disparities head-on in this next round of negotiations and improve enforcement of current minimum access agreements.  Market access priorities for barley include: EU (malting), China (malting/malt), Latin American (malting/malt) and Japan (feed) markets.

Trade Policy

WTO Negotiations
NBGA supports the July 2002 US proposal for WTO agricultural negotiations.  NBGA calls on the US trade negotiators to preserve overall domestic supports at levels authorized in the 2002 Farm Bill, while recognizing the importance of moving toward less trade distorting support programs.

Bilateral Negotiations

• NBGA opposes exclusions of any commodities as part of a bilateral trade negotiation process.

• NBGA supports passage of the Peru Free Trade Agreement.

• NBGA supports passage of the Colombia Free Trade Agreement.

• NBGA supports passage of Normal Trade Relations with Vietnam.

European Union
Oppose EU domestic production and trade subsidies that result in world market distortions.  Urge the Administration to negotiate delisting to the entire Western Hemisphere including malt.

Canada
Support a direct linkage between reform of State Trading Enterprises (STEs) and elimination of export subsidies.  Government-imposed institutional arrangements that provide support to STEs must be incorporated under export subsidy disciplines, with the goal of eliminating those practices.  Examples include, but are not limited to, varietal licensing arrangements, government grading and determination of quality, initial payments, payment guarantees, single desk procurement or selling status of the STE, price pooling, freight pooling, government-determined freight rates, government ownership of the freight car pool, government control of rail car allocation, and government regulation of grain handling rates.

Trade Sanctions

• NBGA opposes U.S. trade sanctions against other countries which inhibit market opportunities for U.S. barley producers.

• NBGA supports increased trade and travel with Cuba.

China
NBGA strongly urges the Administration to aggressively pursue China’s compliance with their WTO Accession Agreement.

Export Program Funding
NBGA supports FY 2007 funding at $200 million for MAP and $34.5 million for FMD.

Trade Liberalization Enforcement
NBGA insists that the WTO take immediate steps to enforce compliance with previously negotiated commitments.  Countries failing to comply with their commitments should be excluded from the benefits of trade liberalization. 

Export Credits
NBGA supports the position of the Export Credit Working Group position of harmonizing reductions in the U. S. export credit program with reductions of EU export subsidies.

NBGA Priorities for DOHA Round Agricultural Trade Negotiations
Cancun Ministerial,
September 2003