Impacts of trade deals examined
By Jacqui Fatka
Published on: Nov 24, 2015
TRADE agreements are fundamental to both expanding exports and global economic development and are critical to the long-term profitability of U.S. agriculture, according to representatives of agricultural groups who testified at the Nov. 17 International Trade Commission (ITC) hearing examining the economic impacts of trade agreements.
The hearing was one part of an investigation Congress requested into the impacts of trade pacts over the last 30 years. The hearing was held to help ITC write a report on the benefits of past trade deals to the U.S. economy.
Maria Zieba, National Pork Producers Council manager of international affairs, testified on the benefits to U.S. pork producers of free trade agreements (FTAs).
Pork producers have benefited tremendously from FTAs, seeing exports increase 1,550% in value and almost 1,300% in volume since 1989 — the year the U.S. began using bilateral and regional trade agreements to open foreign markets.
Last year, U.S. pork exports totaled nearly $6.7 billion and added almost $63 to the price of each hog marketed. The U.S. pork industry now exports more pork to the 20 countries with which the U.S. has FTAs than to the rest of the world combined, Zieba told the commission.
U.S. Grains Council chief economist Mike Dwyer described to commissioners how the North American Free Trade Agreement (NAFTA), the Central American Free Trade Agreement (CAFTA) and FTAs with Colombia and South Korea have helped maintain U.S. competitiveness around the globe (Figure).
These countries are among the largest markets for U.S. corn, barley, grain sorghum and co-products, with U.S. exports of coarse grains and co-products to current FTA partners accounting for 42% of worldwide exports in 2014, according to U.S. Department of Agriculture data. Add in the Trans-Pacific Partnership (TPP) countries with which the U.S. does not already have agreements, and that figure climbs to more than 60%.
"While we have been reaping the benefits of these trade agreements, U.S. agriculture also risks being left behind as other countries agree to preferential agreements that lower tariffs between themselves but leave barriers in place for U.S. exports," Dwyer said. "Today, there are more than 260 trade agreements in place around the world, and the United States is only signed on to 20 of them."
To take advantage of emerging export opportunities — and to maintain U.S. competitiveness — trade liberalization must occur at all levels, including bilateral, regional and multilateral.
"If we want to continue to sell our products to the 95% of the world’s customers outside our borders and the 80% of the global purchasing power they represent, we will need to continue to aggressively pursue trade negotiations such as TPP, the Transatlantic Trade & Investment Partnership (T-TIP) and multilateral trade negotiations through the (World Trade Organization)," Dwyer testified.
Trade agreements hold the key to opening markets and resolving tariff and non-tariff barriers to allow the movement of coarse grains, co-products and other agricultural exports where they are demanded, Dwyer added.
R-CALF USA chief executive officer Bill Bullard testified on the impact the WTO Uruguay Round agreements and the FTAs implemented with 20 countries have had in various sectors of the U.S. economy since 1984.
Bullard’s testimony showed that since the mid-1980s, the U.S. cattle industry has suffered a cumulative trade deficit of $46.1 billion in cattle and beef trade with the 20 FTA countries. "Net exports strengthen economies, and net imports weaken them," he said, adding that the persistent deficits suffered by the U.S. cattle industry have weakened it significantly.
Bullard told ITC it should be self-evident that lower-priced imports cause depressed domestic prices. He presented a chart showing how the U.S. sheep industry has succumbed to lower-priced Australian lamb carcasses.
While not dismissing the importance of exports to the beef industry, Bullard said they are not the controlling factor for the well-being of producers that the industrial meat complex wants producers to believe.
"Our cattle industry prices are ultra-sensitive to changes in supplies, so the positive impacts of expanding exports are quickly overtaken by the negative impacts of even more expansive imports," Bullard said.
The National Cattlemen’s Beef Assn., although not testifying at the ITC hearing, has reported that beef exports currently add more than $350 to each head of cattle sold in the U.S.