National Potato Council 2010 National Trade Estimate Report-Tariffs/Quotas
NATIONAL POTATO COUNCIL
2010 NATIONAL TRADE ESTIMATE REPORT
ON FOREIGN TRADE BARRIERS
The National Potato Council (NPC) represents the interests of all commercial potato growers in the United States. The Council assists its potato growers in addressing market access issues for both fresh and processed potatoes in export markets. In this endeavor, the Council coordinates trade policy objectives with the America Potato Trade Alliance (APTA), a trade group that represents growers as well as many major U.S. potato processors and retailers.
Frozen fries (HS 2004.10) are the industry's primary export product, although fresh, seed, and dehydrated potatoes are also exported in increasing numbers. Improved access to international markets for frozen fries is of principal importance. Additionally, improved market access is also sought for fresh and seed potatoes and other processed potato products.
Exports of U.S. frozen fries to foreign markets such as Japan, Korea, China, and Mexico have increased in recent years due in part to our industry's promotional efforts in these countries. Exports account for 15% of total U.S. potato production and 16% of frozen potato sales. U.S. exports of all potato products were valued at $1.2 billion from July 2008 to June 2009. Unfortunately, access to foreign markets continues to be restricted by a range of trade barriers, described herein.
The U.S. domestic potato industry urges increased bilateral and multilateral pressure to achieve liberalization, particularly in the fast-growing markets of Asia and Latin America. Despite the difficulties encountered in concluding the World Trade Organization (WTO) Doha Round multilateral trade negotiations, the industry supports an aggressive Doha Round agreement that includes strong market access gains for U.S. exports of fresh and processed potatoes through significant tariff reductions in export markets of interest to the industry and substantial reductions in trade-distorting subsidies benefiting potato sectors in competitive foreign countries.
This report is one of three submitted by the NPC, and deals exclusively with traditional trade barriers faced by U.S. potato exports, focusing especially on tariffs and quotas. It should be considered in conjunction with the NPC’s submissions for SPS issues and standard-measures trade barriers.
A separate page is provided for each country in which trade barriers exist.
John Keeling
Executive Vice President/CEO
National Potato Council
1300 L Street, NW, Suite 910
Washington, D.C. 20005
Phone: 202-682-9456
Fax: 202-682-0333
johnkeeling@nationalpotatocouncil.org
November 18, 2009
ARGENTINA
I. High Tariffs (Import Policies)
Argentine tariffs on potato products range from 10% to 14%, with a 14% tariff applied to fry imports from outside the Mercosur area. The 14% tariff is significant. U.S. potato exporters are at a disadvantage against regional producers, who benefit from preferential tariff access.
A significant reduction of this tariff should be sought in the WTO Doha Round negotiations. If the Free Trade Agreement of the Americas (FTAA) negotiations resume, immediate duty-free access should be sought for all U.S. potato products.
II. Estimated Increase in Exports (less than $5 million)
In Argentina, major Quick Service Restaurants are making inroads and increasing demand for frozen fries. Given market access that is equal to the access enjoyed by regional competitors, U.S. frozen fry exports would be expected to increase by several million dollars annually.
BRAZIL
I. High Tariffs (Import Policies)
As part of the Mercosur trade agreement, Brazil imposes a Common External Tariff of 14% on frozen fry imports and 10% on fresh potatoes. These tariffs increase the price differential between higher cost U.S. frozen fries and low cost product from Argentina, Canada, and the Netherlands. In fact, the U.S. has completely lost the market to frozen fries from Argentina, which receives preferential tariff access under Mercosur, and to product originating from the European Union (EU).
II. Estimated Increase in Exports ($5 to $10 million)
The NPC supports efforts to liberalize trade in Latin America, including through the long-delayed Free Trade Agreement of the Americas (FTAA), as long as it results in immediate duty-free access for U.S. potato products and facilitates the removal of unjustified phytosanitary restrictions.
The NPC also supports a significant reduction in Brazil’s tariffs on potato products through the WTO Doha negotiations.
Brazil’s large economy offers significant opportunities for U.S. potato exports. Tariff access equivalent to that received by Mercosur countries would allow U.S. exports to be competitive with lower-priced imports from Argentina and elsewhere. U.S frozen fry exports to Brazil would be expected to increase by several million dollars annually.
CHINA
I. High Tariffs (Import Policies)
Hotel and restaurant management in China report that high Chinese tariffs are the primary constraint to using imported U.S. potato products. Significantly reduced tariffs for frozen fries (HS 2004.1) are of primary interest, since this is the U.S. potato industry's leading export product. Dehydrated potato products (HS 1105.2/2005.2) are of next importance, because Chinese trade contacts have expressed interest in these products. The Council is interested in exporting U.S. fresh potatoes to China for both consumption and further processing, but first the phytosanitary ban must be overcome.
China’s bound tariffs resulting from its WTO accession agreement are shown below. To have meaningful competitive access, U.S. potato growers and processors are seeking the elimination or significant reduction of these tariffs for potato products in the WTO Doha Round agriculture negotiations through a sectoral agreement.
HS# | Description | China's Bound Rate as of 2004 |
|---|
0701.90 | Fresh Potatoes | 13% |
0710.10 | Frozen Potatoes | 13% |
1105.10 | Potato Flour and Meal | 15% |
1105.20 | Potato Flakes | 15% |
2004.10 | Frozen Fries | 13% |
2005.20 | Other prepared or preserved potatoes, including chips | 15% |
1108.13 | Potato Starch | 15% |
The tariff issue has become critically important, especially after China and New Zealand concluded a free trade agreement in 2008 that stipulates that Chinese tariffs on New Zealand potatoes will be eliminated over five years. As of 2013, New Zealand fries will enter China duty free, while U.S. fries may remain at the 13% most favored nation (MFN) rate.
There is also a need for China to make its import policies, including the application of a 17% Value-Added-Tax (VAT), more transparent. In past years, the industry reported that China levied its VAT tax twice, once on the CIF value of the imported product and then again on the combined CIF value of the goods (plus the 17% tax) and the applicable tariff for that classification number. A reduction in the VAT is needed.
II. Estimated Increase in Exports ($15 million)
Although China is the leading producer of potatoes, Chinese production is for local consumption only and is primarily consumed in fresh form. China is among the fastest growing major market for the U.S. processed potato industry. U.S. exports of frozen potato products to China have increased significantly in recent years. U.S. frozen potato exports to China in 2008-09 were valued at $34.9 million. With lower tariffs, it is expected that the market for U.S. frozen potato products could grow to $50 million. The U.S. Potato Board estimates an immediate increase in sales of dehydrated potatoes of $5 million with lower tariffs.
COLOMBIA
I. High Tariffs (Import Policies)
U.S. potato growers and processors are interested in achieving liberalized access to Colombia and other markets in Latin and Central America. Tariffs and competition from regional producers who benefit from preferential access to these markets limit the ability of U.S. growers and processors to achieve any meaningful market presence. For this reason, industry members support the adoption and implementation of the U.S.-Colombia Free Trade Agreement (FTA) and appreciate the duty-free access for potatoes obtained in the FTA agreement.
U.S. potato product exports to Colombia face an applied 20% tariff on frozen fries and a 15% tariff on fresh potatoes. The bound rate is 70% on frozen fries. U.S. potato exports are disadvantaged further by competition from regional producers who benefit from preferential tariff access to the market under regional trade agreements.
In the U.S. FTA negotiations with Colombia, the National Potato Council was extremely pleased to learn of the immediate duty-free tariff concessions obtained for U.S. potato exports. The National Potato Council supports the quick implementation of this agreement.
II. Estimated Increase in Exports ($10 million)
In Colombia and other markets in Latin America, major Quick Service Restaurants are making inroads and increasing demand for frozen fries. Given market access equal to regional competitors, U.S. frozen fry exports could dominate these markets. While short-term increases are limited by the slow economies in the region, U.S. frozen fry exports would be expected to increase by several million dollars annually if tariffs and other market access barriers were eliminated.
COSTA RICA
I. Application of Quotas
With the implementation of the U.S.-Dominican Republic- Central America Free Trade Agreement (DR-CAFTA) in Costa Rica in 2009, tariff reductions for U.S. potatoes are underway. However, challenges have emerged, in the granting of import licenses associated with potato quotas. Apparently, Costa Rican authorities have opened the import licenses to the public, which has resulted in many individuals who have no intention of importing U.S. potatoes obtaining a share of the quota. Instead, their hope is to illegally resell the licenses at a premium to legitimate importers. In the meantime, actual importers do not obtain sufficient quota to meet their needs. This system needs to be addressed.
In October 2009, the U.S. potato industry approached USDA at the U.S. Embassy in San Jose for assistance. Apparently, a similar situation affecting Canadian product occurred in years past and the situation was rectified after the Canadian government weighed in.
II. Estimated Increase in Exports ($5 to $10 million)
The U.S. industry exported $592,322 worth of fries to Costa Rica in 2008-09. Because of the Canada-Costa Rica FTA, significant market share has been lost to Canada, as Canada is benefiting from a preferential TRQ. Now that DR-CAFTA has been implemented, fry exports should increase to $5 million and could expand further in the future. Dehydrated exports have been limited to date, but could reach $1 million with the elimination of all dehydrated tariffs. With full access, fresh potato exports, particularly for processing into chips, could reach over $2 million.
In order for this expansion to occur, Costa Rica’s quota system needs to be improved.
ECUADOR
I. High Tariffs (Import Policies)
U.S. potato growers and processors are interested in achieving liberalized access to Ecuador and other markets in Latin and Central America. Tariffs and competition from regional producers who benefit from preferential access to Ecuador’s market limit the ability of U.S. growers and processors to achieve any meaningful market presence.
For this reason, industry members would support a U.S.-Ecuadorian Free Trade Agreement, provided the agreement grants immediate duty free access for U.S. potato products.
U.S. potato exports to Ecuador face a 30% tariff on frozen fries and a 20% tariff on fresh potatoes.
These tariffs are significant. U.S. potato exporters are disadvantaged further by competition from regional producers who benefit from preferential tariff access to the market under regional trade agreements.
If the U.S.-Ecuador FTA negotiations resume, the U.S. potato industry urges USTR to seek immediate duty-free access for U.S. potato products.
II. Estimated Increase in Exports (less than $5 million)
In Ecuador and other markets in Latin America, major Quick Service Restaurants are making inroads and increasing demand for frozen fries. Given market access equal to regional competitors, U.S. frozen fry exports could dominate these markets.
While short-term increases are limited by the slow economies in some of these countries, U.S. frozen fry exports to Ecuador would be expected to increase by several million dollars annually if tariffs and other market access barriers were eliminated.
INDIA
I. Trade Barrier Description - Excessive Tariffs (Import Policies)
U.S. potato growers and processors have identified India as an important growth market for U.S. frozen fry exports based primarily on the expansion of U.S. Quick Service Restaurant chains in the country. India currently applies a 30% duty on imported potato products. This applied rate is lower than India’s bound rate, but the reduction has been nullified to some extent by the addition and occasional repeal of a variety of “taxes” in addition to the ad valorem tariff.
India applies a 12.36% service tax. The current effective duty paid is over 40% on frozen fries, including a 30% tariff, 4% ADC, and two 3% educational taxes. It is unclear if the other taxes are also applied domestically and therefore WTO compliant.
In recent years, the U.S. potato industry, in coordination with the U.S. Embassy in New Delhi, has requested that India significantly lower its 30% duty on frozen potatoes and 30% duty on dehydrated through the annual Indian budget cycles in which tariffs are set.
Likewise, the U.S. potato industry requested that only the tariff (and not the additional taxes) be applied on potato imports. To date, no progress has been made on any of these requests. The potato industry is also seeking a significant reduction in India’s tariff in the WTO Doha Round agricultural negotiations.
II. Estimated Increase in Exports ($25 million)
The U.S. exported $1.8 million worth of fries to India in 2008-09. Although it is difficult to estimate market potential for U.S. potato products in India since these products have been virtually banned for more than thirty years, the U.S. industry believes that the market presents huge potential for U.S. fries and other potato products. U.S. potato exports to India could be worth $5 million in three years and $20 million in ten years with lower tariffs, based on interest in frozen fry products by U.S. fast food franchises in India. A lower tariff on dehydrated potatoes could yield $2 million in sales with quick growth to over $5 million, due to the growing snack food industry in India.
INDONESIA
I. Excessive Tariff and Tax
Frozen Fries: In March 1998, as part of the Indonesian government's agreement with the International Monetary Fund, the government temporarily reduced its tariff on all agricultural products to 5%. The Uruguay Round bound rate of 50%, however, remains excessive.
Fresh Potatoes: In March 2005, in an effort to protect domestic growers, Indonesia increased the applied tariff on fresh table stock potatoes (HS 0701.90) from 5% to 25%. This move remained WTO compliant because Indonesia’s bound rate is 50%. However, such an action runs counter to WTO intentions of not increasing tariffs.
Indonesia’s bound rates are excessive. Although most applied rates are temporarily low, due to the lifting of the IMF restrictions on these tariffs, Indonesia could move to raise them to bound levels, as occurred with fresh potatoes in 2005. To prevent this possibility, in the context of the WTO Doha negotiations, the industry urges the U.S. government to press Indonesia to bind its tariffs at the low 5% applied rate.
The U.S. potato industry is also aware that Indonesia applies the low 5% tariff to set reference prices for some U.S. horticultural products. These prices are inevitably higher than the invoice price, thus raising costs to importers, exporters, and consumers.
Furthermore, it appears that these reference prices can differ depending on the country of origin of the exports. This practice violates international standards and should be stopped.
II. Estimated Increase in Exports ($15 million)
Indonesia is a promising market for U.S. potatoes, with frozen potato exports reaching $7.7 million in 2008-09. Market research indicates that a binding of the duties at 5% would provide security to exporters and importers and increase annual U.S. exports of frozen fries to Indonesia by up to $15 million.
If the applied tariffs increase, it will mean a significant loss in current export sales.
JAPAN
I. Excessive Tariffs
Japan's tariff on frozen fries is 8.5%. Due to the large volume of frozen fries exported to Japan, this is a significant expense for the U.S. potato industry. Japan's tariff on dehydrated potato flakes is 20%, which is excessive.
In the WTO Doha negotiations, the U.S. potato industry urges U.S. negotiators to seek the immediate elimination of Japan's frozen fry and dehydrated potato tariffs.
II. Estimated Increase In Exports (over $15 million)
Japan is the largest export market for U.S. frozen fries. In 2008-09, U.S. exports of frozen potatoes to Japan were $261 million and dehydrated potatoes were $22.1 million. An elimination of the tariffs on frozen fries and dehydrated potatoes would increase exports to Japan by at least $7.5 million a year for each product.
KOREA
I. Restrictive Tariffs and TRQs
Since 1988, when Korea lifted its import ban on frozen fries, U.S. exports of fries and other processed potatoes have entered the market, but at a slower pace than expected. This is because of Korea's continued policy to discourage imports that compete with domestic production through high tariffs and non-transparent policies.
In the context of the Uruguay Round Agreement, Korea offered only limited tariff concessions on potato products and on several products put in place restrictive tariff rate quotas (TRQs). For fresh potatoes (HS 0701.90), Korea established a tariff-rate quota (TRQ) with a quota volume of only 18,800 MTs in 2007. The over-quota duty is a prohibitive 304%. Market access is restricted by both the tariff and quantitative restriction.
Similarly restrictive TRQs were adopted for potato flour, meal, pellets and flakes. Under Uruguay Round commitments, Korea established a limited TRQ of 60 metric tons for all products classified in the Harmonized System under HS 1105. The TRQ was reduced to 10 metric tons in 2002 and thereafter. The in-quota tariff was reduced to a final rate of 5.4% in 2004. Over-quota product, if entered, is assessed a prohibitive tariff of 304%. Less than one container a year of these products will fill the Korean quota.
The bound tariff on frozen fries (HS 2004.10) is 18%. The tariff on other prepared or preserved potatoes (HS 2005.20) is 20%. These tariffs are particularly restrictive since Korea is a strong market for U.S. exports of processed potato products.
Potato tariffs played an important role in the U.S.-Korea Free Trade Agreement agriculture market access talks. As a result of the dedicated efforts of USTR and USDA, significant improvements in potato market access were achieved. For example, Korea agreed to immediately eliminate its 18% tariff on frozen fries. This elimination will provide U.S. fries an 18% advantage over international competition. Korea also agreed to phase out tariffs on HS 2005.2 over seven years.
Importantly, Korea agreed to distinguish between fresh potatoes destined for chipping and table stock potatoes. For fresh potatoes destined to be processed into potato chips, Korea agreed to eliminate the quota and tariff from December through April. This seasonal duty-free access will allow significant market access and will free the rest of the quota for table stock potatoes. The chip stock duty from May-November will also be eliminated in 15 years.
Korea also agreed to allow a 3,000 metric ton duty-free U.S. table stock quota. This quota will grow 3% annually and will be in addition to the annual WTO quota.
The U.S. potato industry thanks USTR and USDA for their efforts in the KORUS talks on behalf of potatoes and supports passage and implementation of the agreement.
II. Estimated Increase in Exports ($25 million to $50 million)
Current U.S. shipments of all potato-related products to Korea are valued at $57.4 million. The majority of these exports are frozen potatoes, valued at $31.8 million in marketing year 2008-09. Korea is a strong market for U.S. fry exports because of the high concentration of U.S. Quick Service Restaurants (QSRs).
With meaningful tariff reductions, exports of processed potato products to Korea would increase to $50 million. The removal of the TRQ on dehydrated potatoes alone would increase trade by about $15 million annually. Additionally, the removal of the quota on fresh potatoes should easily result in increased sales to over $15 million annually.
Implementation of the U.S.-Korea Free Trade Agreement with its associated reductions on potato tariffs will be the quickest way to achieve these results.
MEXICO
I. Retaliatory Tariffs: Frozen Fries
On March 16, 2009, Mexico announced that it was imposing a 20% retaliatory tariff on frozen fries in response to the U.S. government eliminating a provisional program that allowed Mexican trucks to operate inside the U.S. border. Other commodities were also affected.
The increased duty has had a serious affect on U.S. fry exports. In 2008, Mexico was the second largest export market for U.S. frozen fries with sales of $77.8 million. Since April 2009, sales of U.S. fries to Mexico have fallen 49% over a similar period in 2008.
Mexican importers are now sourcing their fries from Canadian plants to avoid the 20% duty. As a result, U.S. growers are being hurt by the Mexican policy.
The NPC urges the Obama Administration to reinstate the Mexican trucking program so the 20% tariff on U.S. fries can be eliminated and companies will once again source their fries from U.S. facilities.
II. Estimated Increase in Exports ($78 million)
Mexico was the second largest market for U.S. frozen potatoes, with exports in 2008 valued at $77.8 million. The U.S. potato industry is in jeopardy of losing this entire market to Canada if the situation is not addressed.
PANAMA
I. High Tariffs (Import Policies)
U.S. potato exports to Panama face a prohibitive 81% over-quota tariff on fresh potatoes. The in-quota amount (453 tons) is subject to a 15% tariff. In 2003, Panama, for political reasons, also increased the tariff on frozen fries from 15% to 20%.
In the U.S.-Panama Free Trade Agreement, significant potato tariff reductions were achieved. For frozen fries (HS 2004.1), Panama has agreed to a 3,500 metric ton tariff rate quota that will expand by 4% a year compounded annually. The quota will last five years. After that, fries will enter duty-free. The chart below provides the fry duties for the first five years of the U.S.-Panama FTA, assuming the agreement is implemented in 2010.
Frozen Fries (HS 2004.1) |
Year | Quota (in MT) | In-Quota Duty | Over-Quota Duty |
One (2010) | 3,640 | 0% | 16% |
Two (2011) | 3,786 | 0% | 12% |
Three (2012) | 3,937 | 0% | 8% |
Four (2013) | 4,095 | 0% | 4% |
Five (2014) | N/A | 0% | 0% |
For dehydrated flakes, pellets and granules shipped under HS 1105.2 there will be a five-year phase out of the currently applied 15% tariff. For processed products shipped under Chapter 20 (HS 2005.2) there are two tariff reductions proposed. For HS 2005.20.10 “papas fritas” (possibly potato chips), there will be an immediate elimination of the 15% duty once the agreement is implemented. For other potatoes, prepared or preserved (HS 2005.20.20), there will be a five-year phase out of the 15% tariff.
Fresh potatoes will have a 750 metric ton duty-free quota with an 81% over-quota tariff. The tariff quota volume will be expanded 2% a year compounded in perpetuity.
The U.S. potato industry welcomes this increased market access and seeks passage of the U.S.-Panama Free Trade Agreement.
II. Estimated Increase in Exports ($6 million)
With its close historical and military ties to the U.S., Panama has a large number of U.S. Quick Service Restaurants, increasing the demand for frozen fries. Given market access equal to regional competitors, U.S. frozen fry exports could dominate the market. U.S. frozen potato exports to Panama were $2.8 million in 2008-09 and are expected to double in volume in the near term if tariffs were eliminated under a FTA.
PHILIPPINES
I. High Tariffs and Tariff Rate Quota
The Philippine tariff applied on frozen fries and other varieties of frozen and processed potatoes is 10%. The applied duty is significantly below the bound rate of 35%.
The U.S. potato industry is interested in working on market access for U.S. fresh potatoes. However, if the U.S. is granted access, volume is restricted by a tariff rate quota (TRQ) that is roughly 1,500 metric tons, with an in-quota duty of 40% and an over-quota duty of 50%.
This TRQ should be eliminated or substantially expanded and the in-and-out of quota tariffs significantly reduced in the context of the WTO Doha negotiations or in a bilateral agreement.
II. Estimated Increase in Exports ($33 million)
The Philippines is the United States 8th largest market for frozen fries by value, with exports in 2008-09 at $23.7 million. Elimination of the Philippines' tariffs would increase demand by approximately $10 million dollars in the short term.
In addition, the removal of the TRQ on fresh potatoes would create a market for table-stock and chip-stock potatoes valued at $5 million or higher.
TAIWAN
I. High Tariffs (Import Policies)
The chart below shows Taiwan's current tariffs on potato products that were applied upon Taiwan’s entry into the WTO. Although the WTO-negotiated bound tariffs are an improvement on previously-applied tariffs, they are in most cases higher than the 10% bound tariff requested by the U.S. potato industry. In the WTO Doha Round negotiations, the U.S. potato industry is seeking the immediate elimination of all of Taiwan’s potato tariffs.
HS # | Description | Taiwanese Tariff based on WTO Commitments |
|---|
0701.90 | Fresh potatoes (table stock) | 20% |
0710.10.00 | Frozen potatoes | 15% |
1105.10.10 | Potato flour | 10% |
1105.10.20 | Potato meal | 10% |
1105.20.00 | Potato flakes | 10% |
2004.10.11 and
2004.10.19 | Potato sticks, frozen (frozen fries) >1.5kg. | 12.5% |
2004.10.90 | Potato sticks, frozen (frozen fries) <1.5kg. | 18% |
2004.10.90 | Other potatoes, prepared or Preserved, frozen | 18% |
2005.20.10 | Potato chips and sticks >1.5kg. | 12.5% |
2005.20.20 | Potato chips and sticks <1.5 kg. | 15% |
2005.20.90 | Other potatoes, preserved | 18% |
II. Estimated Increase in Exports ($25 million)
The elimination of Taiwan's duties would increase U.S. exports by approximately $10 million annually in the short term and up to $25 million in the long term.
THAILAND
I. High Tariffs on Frozen Fries and TRQ on Fresh Potatoes
U.S. frozen potato exporters are about to lose the entire $6 million Thai market to competitors due to tariff disadvantages. With the U.S.-Thailand Free Trade Agreement negotiations stalled and significant progress at the WTO Doha Round negotiations slow in coming, importers are sourcing frozen fries from Australia and New Zealand, which have a 19% tariff due to FTAs. Chinese fries will also achieve duty-free access in the near future. Meanwhile, U.S. fries must be imported at the 30% MFN rate. Industry officials believe they have approximately six months before the entire market is lost for U.S. product.
The National Potato Council, on behalf of the U.S. potato industry urges the U.S. government to seek a unilateral reduction in the Thai fry tariff to the levels offered to Australia and New Zealand in their FTAs with Thailand. Reducing the tariff will promote economic growth in Thailand, as it lowers costs for restaurants, which can lead to expansion and additional employment and domestic purchases.
Should this action not be achieved in 2010, there will be no shipments of U.S. fries to Thailand.
II. Estimated Increase in Exports ($20 million)
The U.S. exported $8.8 million worth of frozen potatoes to Thailand in 2008-09. In 2009-10, unless the tariff issue is addressed, this number will fall significantly, with the entire market lost in the near future.
If the tariff could be reduced, the U.S. could maintain the market and potentially expand it to $20 million annually.
VENEZUELA
I. Import Permits
Venezuela requires import permits for fresh and seed potatoes. In the past, U.S. importers were unable to obtain these permits due to a Byzantine system of approvals that has remained in effect because of domestic political pressure.
Import permits are often not granted, and when they are granted, the volume approved is less than requested. Decisions on requests for permits take months or are not received at all. The goal of the Venezuelan import permit policy is to force importers to buy domestic product, which is often inferior to U.S. product.
The NPC fully supports efforts to challenge Venezuela on its import permit system. This system must be eliminated, or at least be made transparent, so that it is not used as a non-tariff barrier.
II. Estimated Increase in Exports ($5 million)
Venezuela could be a strong market for U.S. fresh and seed potatoes if the import permits were eliminated or automatically granted.
VIETNAM
I. High Tariffs (Import Policies)
In 2006, the U.S. and Vietnam reached an agreement on Vietnam’s accession to the WTO. In that agreement, Vietnam agreed to reduce its 40% tariff on frozen fries to 13% over six years and its 40% tariff on potato chips to 18% over five years. The U.S. potato industry welcomed that news and anticipates increased sales as a result.
In the WTO Doha Round negotiations, the U.S. potato industry would like to see these tariffs eliminated.
II. Estimated Increase in Exports ($15 million)
In 2008-09, the U.S. currently exported $841,041 worth of fries to Vietnam. The U.S. potato industry has conducted several trade missions to Vietnam to explore possibilities for additional U.S. potato exports.
Given the rapid expansion of Quick Service Restaurants in Vietnam, the country could develop into an important and growing market worth $15 million or more for U.S. fry exports if tariffs and other import restrictions were lifted.
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