May 31, 2001
Dear Mr. President:
The expiration on June 1st of the three-year old quota on wheat gluten from the European Union concerns not only wheat gluten producers, but other much larger consuming industries that depend on wheat gluten imports to manufacture downstream products for the global market. As Chairman of the Consuming Industries Trade Action Coalition ("CITAC"), I urge you to allow this quota to expire. The quota does serious damage to American industries and their workers that use wheat gluten, in addition to placing an economic burden on American consumers.
CITAC comprises a diverse coalition of companies and trade associations committed to open and expanded trade. We support the development of US trade policies consistent with the needs of America's consuming industries. The Coalition represents, among others, farmers, retailers, equipment manufacturers, steel users, oil and gas producers, energy distribution companies and others. These consuming industries have a direct stake in trade restrictions. These industries employ more workers and have a greater positive impact on the US economy than those that advocate frequent use of trade restrictions to protect themselves against global competition.
Continuation of the Section 201 relief on wheat gluten would not only be inconsistent with the World Trade Organization (WTO) decision that found the US quota in violation of international trade rules, but would also go against your stated commitment to open and fair trade. Trade restrictions should only be used for US producing industries in serious situations when the benefits clearly outweigh the losses incurred by consuming industries and the American public. Unfortunately the wheat gluten quota does not meet this standard. Wheat gluten restrictions put manufacturers of animal feed, baked goods, and breads, among others, at a serious competitive disadvantage.
Further, these quotas have had a serious negative consequence in other agricultural sectors, especially corn. As you are aware, in retaliation for limits on European wheat gluten, the EU placed a 3% tariff on US corn gluten. The corn gluten market is a much bigger commodity market, with exports worth at least twice the value of the wheat gluten industry in the US. The end result is that corn producers and refiners are suffering the detrimental effects of quotas on an entirely different agricultural product. When considering the US consuming industries that also need corn and export products made from corn, the adverse economic effects of continuing this Section 201 relief multiply.
Finally, it is American consumers who will suffer as a result of paying higher prices for bread, baked goods, meat, breakfast cereal, and hundreds of other products that depend on the availability of reasonably-priced grains, such as corn and wheat.
Again, I urge you to consider the impact of this quota on downstream industries, as well as the American public. Elimination of this quota would also bring the US one step closer to your goal of reducing trade barriers across the board on agricultural products. We would be glad to meet with you or your staff to discuss this issue in more detail.