By Elizabeth Westendorf, USW Assistant Director of Policy
In 2006, the United States signed the U.S.-Morocco Free Trade Agreement, making it the first U.S. free trade agreement (FTA) that did not fully eliminate tariffs on wheat. Instead, the FTA included a tariff rate quota (TRQ) for U.S. wheat, which is now set at 360,000 metric tons (MT) per year. Over the years, this TRQ has presented a challenge to U.S. wheat exports to Morocco. It is typically only briefly opened once a year, which makes it difficult for Moroccan customers to gain preferential tariff access to high quality U.S. wheat.
U.S. government officials have consistently raised this issue with their Moroccan counterparts, and this year the TRQ administration was improved to allow access to U.S. wheat exports multiple times per year. The first tender of the year filled because of a poor wheat harvest in Morocco in 2016, but Morocco only tenders for 90 percent of the tender at once because buyers can bid 10 percent over that amount in the tender. In October, Morocco agreed to issue a second tender for the remaining 30,000 MT of the TRQ. That tender was filled, and the wheat will arrive in Morocco in December. With the exception of last year and early this year, when Morocco had a poor wheat crop and needed to import more wheat, this is the first time in years that a significant quantity of U.S. wheat has gone in under the TRQ, and these efforts ensure that U.S. wheat will have improved access to the Moroccan market in the future.
Trade agreements do not automatically work perfectly, but this cooperative solution to a problem in the U.S.-Morocco FTA is an important example of the benefits of working within the FTA framework. Trade agreements are a vital tool for opening and expanding new markets and help reduce costs for international wheat buyers. They are especially important in the increasingly competitive global wheat market.