This letter is submitted by FMC Corporation, a U.S.-based chemical company headquartered in Philadelphia, Pennsylvania, which respectfully requests that the FTAA market access agreement result in the immediate reciprocal elimination of tariffs on carrageenan, a food stabilizing agent derived from seaweed, classified under HTS No. 1302.39.00, and microcrystalline cellulose (“MCC”), which is a naturally derived stabilizer and food agent, classified under HTS. 3912.90.00. While immediate duty-free access should be a negotiating goal among the 34 FTAA countries, FMC’s highest market access priority is the immediate elimination of U.S. and Brazilian tariffs on these products, thereby eliminating the significant tariff disparity that currently exists between the two countries on these items.

I. ABOUT FMC CORPORATION

FMC is a global company focused on consumer, agricultural and industrial markets for chemicals. Founded in 1883, the company is headquartered in Philadelphia, Pennsylvania and has operations throughout the world. FMC employs over 5,700 people globally and is listed on the New York Stock Exchange. In 2003, total revenues were $1.8 billion. FMC’s businesses are divided into three sectors, FMC Agricultural Products, Specialty Chemicals and Industrial Chemicals. FMC utilizes its advanced technologies and research to improve the delivery of medicines, power batteries, protect crops and lawns, facilitate the manufacture of glass, ceramics, plastics, textiles and other products, and enhance food textures and tastes.

II. SPECIFIC REQUESTS FOR IMMEDIATE TARIFF ELIMINATION

1. CARRAGEENAN

Carrageenan is a naturally occurring family of carbohydrates extracted from red seaweed. Blends of carrageenan are developed and customized for specific gelling, thickening and stabilizing properties that are desired by the food, pharmaceutical, personal care (e.g. toothpaste) sectors.

FMC is the sole U.S. producer of carrageenan with production in Rockland, Maine. Carrageenan is produced by one small company in Brazil located in Mogi das Cruzes. Among the 34 FTAA countries carrageenan is also produced in Chile, which is exported into Brazil at duties of 2 percent as a result of the Chile-MERCOSUR agreement.

Carrageenan imported into the United States from Brazil is not eligible to enter duty-free under the Generalized System of Preferences (“GSP”) but is subject to a comparatively low 3.2% MFN duty rate. Conversely, carrageenan exports to Brazil face a prohibitive 11.5% duty.

This significant tariff disparity is a major impediment to U.S. exports and should be addressed through immediate elimination of carrageenan duties among all FTAA countries and, most importantly, between the United States and Brazil.

Carrageenan trade between the United States, Brazil and other FTAA countries is as follows:

TABLE 1
U.S. Carrageenan Exports to Brazil and All FTAA Countries

TABLE 2

U.S. Carrageenan Exports to NAFTA, non-NAFTA FTAA Countries

TABLE 3

U.S. Carrageenan Imports from Brazil

Table 1 shows the low percentage of U.S. exports of carrageenan to Brazil relative to other FTAA countries. Table 2 illustrates the point even more clearly, providing evidence of significant U.S. export differentials between its free trade partners (i.e. - Canada and Mexico) and non-NAFTA countries, including Brazil, where the United States also faces high tariffs. Trade volumes with Canada and Mexico are approximately equal to those of all of the other FTAA countries combined. The removal of the substantial tariff impediment will work towards rectifying an obvious distortion in trade flows.

As indicated in Table 3, Brazil’s exports of carrageenan to the United States are minimal.

The immediate reciprocal elimination among FTAA countries, and particularly the U.S. and Brazil, of carrageenan tariffs would result in significant benefit to the U.S. industry. FMC estimates that U.S. carrageenan exports would increase by approximately 30 percent over current levels of exports to non-NAFTA FTAA countries.

2. MICROCRYSTALLINE CELLUOSE

Microcrystalline Cellulose (“MCC”) is a naturally-obtained powder that has a wide variety of food, agricultural, pharmaceutical, and manufacturing applications. It may be used as a tablet binder, emulsifier, stabilizer, anti-caking or dispersing agent. MCC is used widely in salad dressings, pharmaceutical tablets, dairy products, frozen foods, whipped toppings and bakery goods.

FMC produces MCC in Newark, DE. The only other U.S. producer of MCC is Rettenmaier, with production in Iowa. MCC is produced by one company in Brazil, Blanver, located in Cotia, Sao Paolo. As indicated in Table 6, below, Brazil’s exports of MCC to the United States have all but disappeared.

MCC imported into the United States from Brazil (as well as other Latin American countries) enters duty-free under the GSP and does not, therefore, pay the 5.2% MFN duty rate. However, MCC exports to Brazil face a high tariff of 15.5%.

This tariff disparity constitutes an impediment to U.S. exports, which should be addressed through immediate reciprocal elimination of duties on MCC among all FTAA countries and particularly the U.S. and Brazil.

MCC trade between the United States and Brazil is as follows:

TABLE 4

U.S. Microcrystalline Cellulose Exports to Brazil and All FTAA Countries

TABLE 5

U.S. Microcrystalline Cellulose Exports to NAFTA, non-NAFTA FTAA Countries

TABLE 6

U.S. Microcrystalline Cellulose Imports from Brazil

The data on MCC in Tables 4-6 demonstrates a pattern of U.S. exports similar to carrageenan. Table 5 shows the extent to which U.S. exports of MCC gravitate towards its free trade partners under NAFTA. Removing the high tariff applied to MCC in Brazil is essential to restore balance to international trade flows.

The immediate elimination of the duty on MCC would result in significant benefit to the U.S. industry. FMC estimates that U.S. MCC exports would increase by approximately 40 percent over current levels of exports to non-NAFTA FTAA countries.

III. CONCLUSION

The immediate reciprocal removal of all tariff duties on carrageenan and MCC in the context of FTAA negotiations and particularly between the U.S. and Brazil are high priorities for FMC. Trade data between the United States and Brazil reflects significant distortions in trade flows for the two products, which are due to prohibitively high tariff rates imposed on Brazilian imports. These high import tariffs on carrageenan (11.5%) and MCC (15.5%) should be removed upon implementation of the FTAA.

Immediate elimination of tariffs would benefit Brazilian consumers and provide lower cost inputs to down-stream producers of goods which contain carrageenan and MCC. Since MCC and carrageenan are used in a wide range of consumer products - including pharmaceuticals, prepared foods, dairy products, bakery goods, papers and structural composites - the benefit to Brazilian producers and consumers would be considerable.

Thank you for your consideration of these comments.