Oct 1, 2010
Global lessons

The global meat trade around the world is growing and it is becoming an aspect of the U.S. beef industry that is gaining greater importance for all producers’ bottom lines. Politics is perhaps the greatest problem facing our export industry.

Last week, the World Trade Organization (WTO) announced that the U.S. is violating international trade rules by banning cooked chicken from China. China said the ban on chicken imports was unscientific and discriminatory; they immediately imposed tariffs on poultry exports to China. The U.S. ban was implemented on the heels of the avian influenza issues and other food safety concerns. Those contamination issues cost one Chinese politician his life; he was executed for not doing his job. It would appear the Chinese are serious about maintaining export standards.

China pointed out to the WTO panel that their cooked poultry has met international health standards and they have been shipping product to Japan and Europe. Those two markets are perhaps the two most critical, health-conscious markets in the world, and the U.S. has been attempting to expand sales to both of them with only limited success.

Last week, Congress was contemplating voting on a bill that would declare China’s undervalued currency a subsidy, clearing the way for duties to be imposed on Chinese imports. Subsequently, China declared that they would put a tariff of up to 105 percent on some U.S. processors which are exporting fresh chicken to China. The U.S. exports 800,000 metric tons of chicken to China annually and it is our third largest customer for agriculture products. A trade war with China would be devastating to U.S. producers.

Also, two weeks ago, the WTO held their first hearings on complaints from Mexico and Canada over concerns that the U.S. is violating international trade rules with the implementation of Country of Origin Labeling (COOL). The law has been in place for roughly two years now.

Early reports from the hearing were rather negative for U.S. COOL regulations. The Canadians argued in detail that the law has disrupted trade and “destroyed” the integrated nature of the Canadian market for hogs, feeder cattle and beef. John Masswohl of the Canadian Cattlemen’s Association (CCA) testified that COOL has cost the Canadian beef industry $300 million. It has also cost Mexican cattlemen quite a bit too.

Apparently, CCA knew what to expect from the U.S. and had a pretty good argument against it. The U.S. representatives said that COOL was designed to inform consumers, not restrict trade, and that the law has not directly caused any segregation or other economic harm to Canadian producers. The Canadians said the markets’ reaction to the law was not only predictable but, in fact, the intended outcome of COOL’s proponents.

It appears that we have quite a few trade battles going on where meat is the focus. There’s no question that the U.S. has put up trade barriers while we expect other countries to drop theirs. It’s interesting to note that Japan seems content to consume Chinese chicken while on the other hand, they are clearly working very slowly at accepting international standards for imported beef products.

The Obama administration has said that they want to open foreign markets to help the economy grow and create jobs, but they haven’t done much to improve the situation. Several weeks ago, the White House was taking credit for the robust ag export markets. They are also taking credit for how well their recovery plans have worked. But, a weaker dollar may be the only thing they are actually benefitting from.

There are several free trade agreements waiting to be completed in Washington, D.C. Other countries, such as Canada, are completing many of those same agreements that are essentially collecting dust in the U.S.

Clearly, Congress and the president are more concerned about politics than they are about doing the business of America. They don’t quite get the idea that the business of America, is business.

A trade war with our customers is about the last thing we need in the beef business, especially since global meat production is at an all-time low.

The WTO apparently doesn’t see U.S. meat products as much different than those produced in the rest of the world. If we want to trade, we’re going to have to play by the rules. I suppose that’s the lesson that everyone needs to learn, especially if we want the economy to grow. — PETE CROW