It looks like these ancient free trade agreements with South Korea, Colombia and Panama are about to become reality. These three trade bills have been sitting on President Obama’s desk ready to go since he took office, almost three years ago. It appears that Obama finally understands that to create jobs, you need to be able to sell something, and to sell something, you have to have something to sell. But he has been an ardent hold out on these agreements since he took office because of union and human rights issues in Colombia, along with his fear that the three agreements will send more manufacturing jobs overseas.
One thing that opponents of the bills perhaps don’t understand is that all three of those countries already trade with the U.S. on a mostly tariff free basis. While we’ve been waiting for Obama to get his political house in order, many of our competitors have been hatching their own free trade agreements with these countries.
As usual, everyone looks at the agreements with their own interest in mind, not necessarily what’s good for the country as a whole. For agriculture and the beef industry, these deals are great and will allow us to sell more beef to the three countries, that is, if we have any to sell. Beef production is expected to go down next year. The export market has helped keep beef demand up in an otherwise soft domestic market.
The folks at the U.S. Meat Export Federation (USMEF) say that the deal will be worth a billion dollars for South Korea alone, and could double beef exports to that country over the 15-year implementation period. We currently have a 40 percent tariff on U.S. beef going to South Korea. USMEF estimates that Colombia and Panama will be worth $35 million in beef sales collectively.
The combined bills passed through the House Committee on Ways and Means last week, and the full House will vote on the three bills this week. Then they will go to the Senate where things could get a bit stickier.
There is quite a bit of concern from mostly Democrats that the bills will be harmful to the auto industry and Colombia’s protections on labor rights.
Colombia has a habit of exterminating union labor leaders. The big trade off for passing these bills is the president’s insistence on a worker retraining program and financial benefits for workers displaced by foreign competition, a program that we already have.
American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) President Richard Trumka said the three trade pacts are “lousy” deals that will destroy 159,000 jobs by encouraging companies to send work overseas. However, the U.S. Chamber of Commerce says that the trade pacts will create 380,000 U.S. jobs. Getting these agreements finalized and ratified has become even more important with the recent enactment of Free Trade Agreements by the EU with South Korea, Canada and Colombia. I suppose that if the AFL-CIO and the Chamber of Commerce are right, the U.S. will have a net benefit of 220,000 jobs, certainly a step in the right direction.
The National Cattlemen’s Beef Association (NC- BA) has been working for some time, pushing these trade bills through. NCBA President Bill Donald said, “This marks the biggest leap forward we have seen in nearly five years when the trade pact with Colombia was signed. Rural America is nearing a historic moment. These three agreements will create roughly 250,000 jobs right hear in the United States and increase profitability for our nation’s family farms and ranches.” Sources tell us that Obama wants the deal done before South Korean President Lee Myung-bak visits Washington next week.
From where I sit, Congress doesn’t have a choice but to pass these trade agreements. The U.S. needs to create some jobs and that’s not going to happen by passing any more worker training bills. We need to sell products and services overseas and hopefully get some trade balance back into the picture. Trade is good! Nobody gets a job without a transaction or a sale. And we certainly can’t afford to have these huge trade imbalances forever. Agriculture is the only industry in the U.S. with a positive trade balance. So I say, “charge on” and get it done. — PETE CROW