American beef producers are at the heart of a great national debate — the trade debate. And, it will not only set the course for U.S. agriculture, but influence this country's trade policy for at least the next decade.
There are two possible visions for trade policy, says Allen Johnson, the chief agriculture negotiator for the office of the U.S. Trade Representative. One looks inward and is stagnant; the other looks outward and is dynamic.
“The inward vision is basically economic isolationism where we limit our engagement with the world,” he says. “It focuses only on supplying our own markets.”
But, he explains, the U.S. has become so mature and efficient that producing for the domestic market simply isn't enough.
“It's impossible to paint a positive picture of U.S. agriculture without looking outward,” he says. “U.S. farmers and ranchers must recognize that a growing global economy creates new opportunities to access new customers and rapidly growing markets overseas.”
And, by using trade to help energize other economies, the U.S. gains customers who have more disposable income to spend on things like higher-quality food.
“Why shouldn't we want to help make the world a better place?” Johnson asks. “By engaging in trade, standards of living will improve and incomes will increase.”
Johnson says most nations' populations, and their food consumption, are growing at a much faster rate than in the U.S. And, in many cases, the U.S. has a comparative advantage in the production of those higher-value agricultural products. And, the North American Free Trade Agreement and the Uruguay Round of the World Trade Organization's (WTO) trade negotiations have put more money into the pockets of U.S. consumers.
“We've calculated those agreements are worth about $2,400/year for each family of four in this country,” he says. “That's money that fuels an improvement in our standard of living — to where we can, in turn, buy higher-quality food items like beef.”
Engaging In Trade Policy
Johnson warns though, that trade is a two-way street. While other countries are “in awe” of the strength of U.S. agriculture, we should never expect them to open their markets to us if we don't open ours to them.
“There are people we'll never convince that trade is good for them,” he says. “But, in every free trade agreement, we will include agriculture — and we will work to maintain a U.S. trade surplus in the value of beef.”
He points to free-trade agreements (FTAs) the U.S. recently signed with Central America, Morocco and the Dominican Republic, where he emphasizes there's virtually no “down side” from an agricultural standpoint. And, he says, other FTAs in the works — Thailand, Columbia, Peru and Panama — will also be positive for U.S. agriculture.
“The American Farm Bureau analyzed the Dominican Republic and Central American FTAs alone and found agricultural exports would increase by $1.5 billion,” Johnson says. “How can you argue these agreements are bad for U.S. ag?”
Some of the items on Johnson's big-picture trade agenda include:
Elimination of export subsidies through the WTO. The European Union (EU), for example, is allowed to spend $2 billion in export subsidies on wheat and beef alone.
Reduction and further harmonization of trade-distorting domestic support programs. The EU provides $70 billion in trade-distorting domestic support — substantially increasing access to world markets where the allowed WTO tariffs are 72% for wheat and 85% for beef.
Targeting in WTO negotiations a long list of trade-distorting policies that frustrate U.S. producers, such as the monopoly on export rights held by the Canadian and Australian wheat boards.
Negotiating new and pending FTAs, which combined, would constitute the third-largest U.S. export market and the sixth-largest economy in the world.
“As we work through these trade agreements, we remain sensitive to concerns of domestic producers,” Johnson says.
The FTA with Australia, for example, maintains significant limits on beef imports through quantitative restrictions and safeguards. Additional beef imports from Australia will amount to less than 1% of U.S. production over the next 18 years.
“The vast majority of these imports do not directly compete with our high-quality beef products,” Johnson explains.
Looking beyond specific FTAs, he asks U.S. farmers and ranchers to embrace the outward vision in regard to trade.
“That's the only way to ensure we're growing and leading the road to the future,” Johnson says. “The alternative of being left behind as our competitors and customers move on without us should not be tolerated.”