Trade means jobs for the American beef industry
This week (May 30-June 3, 2011), we are honoring two engines in our nation’s diverse economy: trade and the American beef industry. These two engines at first look may not seem like a natural fit. However, it is telling that “World Trade Week” occurs during “American Beef Month.” With this month being an ongoing celebration of our cattle ranchers, this is an opportunity to have a real conversation about the impact of international trade on the American cattle industry.
Production of approximately 12 million metric tons of beef annually doesn’t mean much if we cannot reach the world’s customers. In fact, 19 out of every 20 consumers of food and agriculture products worldwide live outside the U.S. By failing to level the playing field through trade promotion agreements, we risk handicapping the American rancher.
Right now, America has a great opportunity to open markets for U.S. beef through approval of pending agreements with Colombia, Panama and South Korea. Together, these agreements would increase the sales of American products by at least $13 billion per year. In Panama, the agreement is expected to increase exports, lower the trade deficit, and stimulate U.S. economic growth. The American Farm Bureau estimates that the increase in farm exports to Panama as a result of the agreement could exceed $195 million per year, nearly doubling current U.S. exports.
More than half of current U.S. farm exports to Panama will become duty free immediately, giving American farmers an advantage over their European Union (EU) and Canadian competitors. An overall analysis by the U.S. International Trade Commission estimates that U.S. exports to Panama for key products will increase anywhere between 9 percent to 145 percent. Most importantly to our cattle industry: exports of meat products are expected to increase by 62 percent.
Another example of the benefits provided by trade to the cattle industry would be the U.S.-South Korea Trade Promotion Agreement. When implemented, this agreement would reduce South Korea’s current tariff on U.S. beef from 40 percent to zero over the next 15 years. The U.S. beef industry would see $15 million in new tariff benefits in the first year alone, and about $325 in tariff reductions once fully implemented.
In 2010, South Korea was already the fourth highest importer of American beef. Due to the prohibitive tariffs in place, Australia is currently the top beef exporter to South Korea. Once the South Korea Free Trade Agreement becomes enacted, Korea could eventually be a $1 billion market for U.S. beef producers.
Trade means jobs. In our sluggish economy, where unemployment still hovers at 9 percent, we must do all that we can to get Americans back to work. The American cattle industry employs more than 1 million ranchers, farmers, or businesspeople. In my home state of Texas, ranchers and farmers alone totaled more than 16,000 workers. These three pending trade agreements are expected to boost U.S. economic growth by $10 billion—creating more than 250,000 American jobs.
If we don’t pass these trade agreements in a timely manner, I can guarantee that China, the EU, Canada and others will take full advantage of American inaction. Already, American ranchers are in danger of falling behind as countries move forward with agreements that block U.S. sales into international markets. For example, Colombia has entered into an agreement with Canada, scheduled to go into effect in less than six weeks, giving Canadian exporters a significant competitive advantage over the U.S. in the market for products such as beef. Also, on July 1, the Korea- EU Free Trade agreement will go in to effect—eliminating 82 percent of South Korea’s tariffs, giving European exporters a significant competitive advantage over the U.S. in the South Korean market.
The time is now for Congress and the administration to level the playing field for America’s beef industry. When we are able to compete on a level playing field, when our American ranchers can sell goods around the world—we create jobs. It is not enough for folks to buy American: we must also sell American. The sooner we open these markets, the sooner we can compete, the sooner Americans can win. — U.S. Representative Kevin Brady, R-TX