TFI Comments on Objectives for a New Trade Agreement between the U.S. and the European Union

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December 11, 2018

Summary of The Fertilizer Institute's Comments to the Office of the U.S. Trade Representative on Objectives for a new trade agreement with the European Union

Although the U.S. remains a net importer of nitrogen fertilizer products, many TFI members either presently export fertilizer products into the European Union (EU) or would like to do so.  However, the potential export opportunity is severely constrained by a prohibitively high duty rate of 6.5 percent imposed by the EU on U.S. fertilizer imports, including the leading nitrogen and phosphate products (e.g. urea, ammonium nitrate, urea ammonium nitrate solution, diammonium phosphate (DAP) and mono-ammonium phosphate (MAP).   In contrast, the U.S. has permitted duty-free entry of all fertilizers from Europe since the Tariff Act of 1922. 

As the low-cost producer of nitrogen fertilizer, the exportation of U.S.-produced nitrogen fertilizers has become commercially viable, so long as barriers are eliminated. Although the U.S. remains a net importer of nitrogen fertilizer products, many TFI members either presently export fertilizer products into the European Union (EU) or would like to do so.  However, the potential export opportunity is severely constrained by a prohibitively high duty rate of 6.5 percent imposed by the EU on U.S. fertilizer imports, including the leading nitrogen and phosphate products (e.g. urea, ammonium nitrate, urea ammonium nitrate solution, diammonium phosphate (DAP) and mono-ammonium phosphate (MAP).   In contrast, the U.S. has permitted duty-free entry of all fertilizers from Europe sincAs the low-cost producer of nitrogen fertilizer, the exportation of U.S.-produced nitrogen fertilizers has become commercially viable, so long as barriers are eliminated. e the Tariff Act of 1922. 

In the case of phosphate, the EU is dependent on imports to meet nearly all on-farm demand, but this large demand is effectively closed to U.S. producers—the second largest producing country of these products in the world—because several key competitors are not subject to the 6.5% import duty.  As a result, EU farmers pay much higher prices for the leading phosphate products because prices move up to just less than the level that would make economics work for imports from duty-disadvantaged countries.  The chart below shows that the annual average import price of diammonium phosphate (DAP) at Ghent was about $50 per tonne greater than the New Orleans barge price for domestic or imported product.

The EU has already removed tariffs on fertilizer imports from other nations – including Algeria, Morocco, Egypt and Canada, through separate trade agreements.  We believe this is an issue of simple fairness and reciprocity and encourage the U.S. to end the one-sided duty-free market that has now been in place for almost 100 years.

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The Fertilizer Institute (TFI) is the leading voice of the nation’s fertilizer industry. Tracing its roots back to 1883, TFI’s membership includes fertilizer producers, wholesalers, retailers and trading firms. TFI’s full-time staff, based in Washington, D.C., serves its members through legislative, educational, technical, economic information and public communication programs. Find more information about TFI online at TFI.org and follow us on Twitter at @Fertilizer_Inst and SlideShare. Learn more about TFI’s nutrient stewardship initiatives at nutrientstewardship.org and on Twitter at @4rnutrients