California Farm Bureau Federation, USA
Farm groups make case for passage of free-trade deals
1 June 2011
By Ching Lee, Assistant Editor
Emphasizing the importance of trade to the nation’s economy and the need to prevent the loss of existing export markets, agricultural leaders converged on Capitol Hill to urge for immediate passage of three outstanding trade agreements.
American Farm Bureau Federation President Bob Stallman, along with leaders from other agricultural organizations, joined Rep. Frank Lucas, R-Okla., chairman of the House Committee on Agriculture, in a news conference last week to mark World Trade Month and voice support for pending trade deals with South Korea, Colombia and Panama.
Leaders from each group, which included representation from the beef, pork, wheat, soybean and corn sectors, all expressed concern that the long-stalled trade agreements have allowed competing countries to stake claim to U.S. markets. Stallman said the debate is no longer about opening markets, but trying to keep them.
"We’ve gone from offense to defense," he said. "We’re seeing a proliferation of (free trade agreements) around the world, and the U.S. is not a part of very many of them."
He noted the United States lost 50 percent of its exports to Colombia from 2008 to 2010, going from a 46 percent market share to 21 percent.
He said Colombia and Panama are now importing more products from other countries, particularly Argentina, Paraguay, Uruguay and Brazil, because those countries have negotiated a much more favorable tariff structure.
"They told us over and over again they want to buy our products; they like the quality," Stallman said. "But they can’t overcome the difference in tariffs that exists. So while we wait and wait to pass agreements that will make us competitive and lower our tariffs, we have our competitors already walking in and taking over those markets."
Once buyers adjust to new suppliers, "it’s a fight to get the markets back," he warned. "So the longer we wait, the more market we lose."
Dana Peterson, CEO of the National Association of Wheat Growers, said the pending trade agreements are especially important to wheat producers because they export half of their crop.
She said the United States could lose $100 million worth of wheat sales to Colombia if the trade deal with the South American country is not completed by this summer.
"In fact, our buyers of U.S. wheat are already transitioning their mills to use wheat sourced from other locations," she said.
Bill Donald, a Montana rancher and president of the National Cattlemen’s Beef Association, said South Korea’s demand for U.S. beef is growing, but the current 40 percent tariff placed on all cuts of U.S. beef is "the greatest hindrance to expanding U.S. beef exports into Korea."
Once implemented, the U.S.-South Korea free trade agreement would phase out those tariffs, saving U.S. beef exporters an estimated $15 million the first year and $325 million annually thereafter.
"This is hundreds of millions of dollars in cost savings that will stimulate the beef industry and rural America," Donald said.
He added that annual exports of U.S. beef could increase as much as $1.8 billion once the agreement takes effect, but warned that if Australia successfully ratifies its bilateral trade deal with South Korea before the United States, Australian beef will enjoy a nearly 3 percent tariff advantage over U.S. beef for the next 15 years.
Implementation of the U.S.-Colombia trade agreement would immediately eliminate an 80 percent tariff on U.S. prime and choice beef, Donald said. All tariffs on U.S. beef would then be phased out over 15 years. The United States exported $750,000 in beef to Colombia in 2010.
"U.S. beef will be on a competitive footing with beef imports from Brazil and Argentina. These trade agreements are truly about fair trade as well as free trade," he said.
On the Panama deal, Donald noted the current 30 percent tariff on prime and choice beef cuts would be lifted immediately when the deal becomes effective, with duties on all other cuts being phased out over 15 years.
"Failure to implement these pending trade agreements sends the wrong message to our major export markets like China and Russia, markets with tremendous potential but limited or nonexistent access," Donald said. "That demand will be met by someone. It should be met by U.S. producers selling U.S. beef."
In a separate news conference held last week in Washington, D.C., officers and staff of the U.S. Meat Export Federation covered some of the latest issues affecting U.S. beef and pork exports and global meat trade.
Philip Seng, president and CEO of the export federation, said U.S. meat exports made significant gains this past year. Despite the economic setback in Japan due to the earthquake, tsunami and nuclear disaster, he said beef exports to Japan "eclipsed all other markets" in recent weeks, with about 3,000 metric tons. In the first quarter of 2011, beef exports to Japan went up 75 percent, he added.
He said part of the recent heavy purchasing may be because Japanese buyers know U.S. beef prices trend higher in the summertime, so they are taking advantage of the current season’s lower prices.
But the one Asian market that U.S. beef producers "desperately" need access to is China, said Joel Haggard, the export federation’s senior vice president for the Asia-Pacific region. U.S. beef has been shut out of the Chinese market since a bovine spongiform encephalopathy scare in 2003.
He said there are very few eligible meat-supplying countries to China, which has been unable to meet its domestic demand for meat and has seen record-high beef prices this year. With China’s economy growing at a rate of 9.7 percent and its consumers’ demand for meat rapidly escalating, "this is a market where we can’t afford not to be in," he said.
(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)