President sends three trade agreements to Congress

Oct 7, 2011

Despite a lengthy waiting period, agriculture industries across the board are praising President Obama’s action on three pending Free Trade Agreements (FTAs) and hoping lawmakers will take a little less time to give the final approval.

The FTAs with Colombia, Panama and South Korea were originally signed under former president George W. Bush, and are expected to boost U.S. exports by $13 billion and benefit the U.S. agriculture and manufacturing sectors, in addition to creating U.S. jobs.

National Cattlemen’s Beef Association (NCBA) President Bill Donald said the long-awaited agreements, moved from the president’s desk to Congress, were very encouraging but also cautioned that the agreements are far from implemented.

“Today marks the biggest leap forward we have seen in nearly five years when the trade pact with Colombia was signed,” said Donald. “Rural America is nearing a historic moment. These three agreements will create roughly 250,000 jobs right here in the United States and increase profitability for our nation’s family farmers and ranchers.”

Donald said cattlemen will not rest easy until the agreements are fully implemented but commended members of Congress for their long-standing support of free trade.

The U.S. Meat Export Federation (USMEF) also praised Obama’s submission of the FTAs, touting it as a positive step toward improving the U.S. balance of trade and creating new jobs in America.

“This move by President Obama is a critical step toward passing free trade agreements that will help ensure a level playing field for U.S. exports internationally,” said Philip Seng, USMEF president and CEO.

Like NCBA, USMEF is encouraging Congress to quickly move forward on the FTAs because of the benefits.

USDA has estimated that ap proval of the FTAs would increase U.S. agricultural exports $1.9 billion in South Korea, $371 million in Panama, and $46 million in Colombia. They also would create an estimated 20,000 U.S. jobs.

For the U.S. red meat industry alone, it is projected that the U.S.- South Korea FTA would boost U.S. beef exports to more than $1 billion per year over the 15-year implementation period—up from $518 million in 2010. For pork, exports would more than double (from 2010 value) to more than $400 million by 2016. Korea is currently the fourth-largest value market for both U.S. beef and pork exports and the FTA will reduce duties by 40 percent on beef and about 25 percent on pork, making U.S. red meat even more competitive.
Ratification of the Colombia and Panama FTAs would add an estimated $25 million in pork exports by 2016 and about $35 million in beef exports.
The U.S. Grains Council (USGC) added that in addition to increasing export opportunities, the three pending bilateral FTAs had the potential to open other doors for agreements and rebuild lost markets.  
“We are encouraged by the administration’s submission of the long-standing free trade agreements for ratification by Congress,” said Dr. Wendell Shauman, USGC chairman and Illinois corn farmer. “Passage of these agreements will help to immediately level the playing field and allow organizations like the council to aggressively re-engage with our international partners and win back lost market share.”
Lack of ratification has led to loss of U.S. exports and market share, as a number of foreign competitors have aggressively pursued favorable trade deals that place U.S. exporters at a competitive disadvantage, according to USGC.   
“The three trade agreements are critical components of U.S. competitiveness in the international marketplace. Once ratified, they will offer immediate duty-free or preferential treatment for U.S. coarse grains exports and most U.S. agricultural commodities. This will not only benefit U.S. producers, but will also enhance each country’s ability to meet the needs of its growing middle class for high-quality protein products at low cost to consumers,” said Shauman.
Agriculture Secretary Tom Vilsack discussed the FTAs with media representatives last week, addressing concerns that the U.S. is at a disadvantage because of recent ratification of a similar deal between South Korea and the European Union which took effect in July. During the meeting, he pointed out that the U.S. used to be Korea’s largest trading partner, but that it now sat at fourth place, falling from 21 percent to 9.
“It would mean that the Korean FTA would have a greater impact on agriculture than the nine previous FTAs that we’ve entered into,” he said, adding that there is a “clear message that allows us to look more aggressively to barriers in the region [such as China and Japan].”
The agreement with Colombia would provide access to their markets. “In 2010, we did almost $830 million in exports there,” Vilsack said. “This will add several hundred million, across all agricultural industries, and U.S. exporters will immediately receive duty-free treatment.”
“Duty-free trade needs to be a two-way street,” Vilsack said, referring to the Panama agreement. “The agreement would lower tariffs and level the playing field over time,” he said.
“Over the past two years as the nation has rebounded from the worst recession in decades, American agriculture has shattered trade records and created jobs. And these agreements will build on that success, helping provide higher incomes for producers, more opportunities for small businesses owners, and jobs for folks who package, ship and market agricultural products. If we’re going to get America working again, then these trade agreements are critical. We cannot afford to leave these jobs on the table,” he added.
After years of debate and stalling of the FTAs, optimists are hoping maybe this is a turning point. But the doubts are still there.
Vilsack explained that concerns over violence against laborers and the need to provide protection were part of the reason the FTA’s have taken so long to reach this point. “In addition, the president needed to strengthen the agreements to make them better,” he added. Then when the House of Reps said they wanted them all as a package instead of individuals, it added more time.
The agreements now have to be ratified in the three countries, which Vilsack believes will happen quickly.
The U.S. House of Representatives will consider the Generalized System of Preferences, which includes Trade Adjustment Assistance, alongside the trade agreements. NCBA Manager of Legislative Affairs Kent Bacus is hopeful that the “tremendous bipartisan support” of all three FTAs in the House and Senate will push the pacts to final passage very soon. However, Bacus said he will make no assumptions about a timeline.
“Given the history of these trade agreements, which have fallen victim to political games on several occasions, we are not about to make any projections,” said Bacus. “Farmers and ranchers need these agreements. Our economy needs these agreements. We need Congress to pass these job-generating trade pacts as soon as possible.” — Traci Eatherton, WLJ Editor