Commodity Fact Sheet
Whatís the Outcome for Oilseeds?
On February 8, 2004 the United States and Australia concluded negotiations on a Free Trade Agreement (FTA), and on February 13, 2004, President Bush notified Congress of the intent of the United States to enter into an FTA with Australia. The FTA contains commitments on most agricultural products, and addresses other trade measures between the two countries as well.
The current situation . . . Australia generally applies low tariffs on oilseed and product imports, and in the case of soybean and peanut oils, provides lower applied tariffs than required under its World Trade Organization (WTO) commitments. In recent years, U.S. sunflower seed entered duty-free, while peanuts, peanut oil, and soybean oil faced an import duty of 5 percent. From 2001 to 2003, the United States exported on average $52.2 million of soybean meal, $24.2 million of soy flours and isolates, and $4.4 million of soybeans to Australia. In 2003, the United States exported a total of $134.8 million in oilseeds and products to Australia, making Australia the United States 16th leading export market for oilseeds and products.
With the agreement . . . Australia eliminates immediately tariffs for all oilseeds and products shipped from the United States, thereby improving the competitive position of U.S. exporters of oilseeds and products including soybean and peanut oils relative to other suppliers, such as Argentina.
United States Commitments
The current situation . . . Australian oilseeds face U.S. import tariffs ranging from zero to 19.1 percent ad valorem. The United Statesí imposes an import duty for soybeans of zero and 19.1 percent ad valorem for soybean oil. Cottonseed is levied an import duty of 4.1 percent, while safflower seed oils are assessed a duty of 5 to 6 percent. Peanuts fall under a tariff-rate quota (TRQ). Australia is not granted a country-specific quota allocation under the TRQ, but ships under the residual allocation as established under the Uruguay Round Agreement. Cottonseed is by far the most significant oilseed commodity imported by the United States from Australia. For 2001 through 2003, U.S. imports of cottonseed averaged $21.7 million, followed by safflower seed and products at $852,000, and sunflower seed oil at $142,000.
With the agreement . . . Australia gains preferential access as tariffs fall immediately to zero for cottonseed, and duties for safflower seed oil to be completely eliminated in four years. The United States will establish a preferential FTA TRQ for Australian peanuts. This preferential TRQ will allow duty-free access initially for 500 metric tons of peanuts and will expand over 18 years at a rate of 3 percent annually. The over-quota rate will be reduced to zero in equal annual steps over 18 years.
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