June 13, 2005
We all have opinions on the issues and communicating those thoughts to government is relatively easy. For instance, debates surrounding the Central American Free Trade Agreement (CAFTA) have been very free in coming from both sides of the issue. The consumer group Public Citizen, which has been in the news lately as aligned with R-CALF on the BSE issue, also has an opinion about CAFTA. They don’t want it, which is not really a big surprise.
As far as the beef industry is concerned, CAFTA appears to be about the same as the North American Free Trade Agreement (NAFTA). After NAFTA went into effect, beef sales to Mexico skyrocketed, and they became one of our largest export markets for beef. With the passage of CAFTA, beef trade to Central America is expected to grow from $12.5 million to $40 million.
The big fear for some in the beef industry is the expectation that those Central American countries will export more manufacturing beef to the U.S. And, frankly, that’s all they can produce in that region—lean bos indicus, grass-fed cattle.
There is also the fear that CAFTA will set a precedence for the Free Trade Agreements of the Americas, which some think will simply create a threat from the big South American beef machine. The big road block for much of South America is still going to be hoof-and-mouth disease. Brazil ships no fresh beef to the U.S. The U.S. pretty much has ownership of the grain fed beef markets around the world, which should be back to normal soon.
There is a fear that Brazil will tranship beef to CAFTA countries, which will process that product into ground beef and other meat products and then ship it to the U.S. However, transhipping and origin issues appear to be addressed in detail in those trade agreements.
The debate over these trade agreements are full of conjecture and speculation, and the groups that are engaging in the debate need to bring more to the table other than a few sound bites that are not supported by any facts.
The National Farmers Union (NFU), a liberal farm group, told the Senate Agriculture Committee last week that CAFTA is yet another empty promise that continues the failed trade policies of the past. Estimates of sizable trade gains for U.S. farmers and ranchers are overly optimistic. The CAFTA countries have a combined population of approximately 40 million people with limited resources that can be used for the purchase of agricultural products. That comment might have some credibility if everyone in that region were in poverty, and that is absolutely not the case.
Once market issues are addressed in the debate, opponents always seem to turn to the labor issue, and that we will just be exporting jobs. The irony is that manufacturing jobs in the U.S. have been declining, on a percentage basis, steadily since 1944 when 38.5 percent of the entire U.S. work force was manufacturing for the war effort. Today manufacturing jobs are only 11 percent of the U.S. workforce.
Total manufacturing jobs in the U.S. peaked in 1979 at 19.4 million jobs and the most recent number shows that there are 14.2 million manufacturing jobs today. The manufacturing portion of our economy was in decline way before NAFTA and other trade agreements.
While total jobs have gone down, the level of productivity has gone up two percent a year since 1950, which has created higher-valued manufacturing jobs that have more purchasing power.
I’m confident that the job issue really doesn’t have that much weight in the debate on whether Congress should ratify this agreement. Expanding our trading opportunities is always a positive element and comparing beef products from Central America to the U.S. is no comparison.
The entire issue on these trade agreements is about creating markets and expanding sales, and beef sales are what we’re concerned about. Forty million dollars really isn’t a lot of money in the beef arena, but every bit helps and all anyone can ask for is the opportunity to access the markets. These agreements do go both ways, but I don’t see much on the down side. I have confidence that U.S. cattle producers can compete and make it work. I would say that fear of change is our only obstacle. — PETE CROW