USDA Secretary Tom Vilsack made a push this week for the U.S.-Korea Free Trade Agreement by highlighting its benefits. Ironically, while it eliminates most ag tariffs almost immediately and pork tariffs by 2016, it will take 15 years for beef tariffs to be reduced to zero. However, the small gains we would enjoy in the meantime should result in significant increases in market share.
Trade, however, is a political hot button. Strong activist groups have targeted trade and they have been successful. Much like the environmental movement, which has succeeded in shutting down domestic petroleum exploration, production and refining in the U.S. to the detriment of consumers, the anti-trade lobby has largely stifled trade agreements as well.
Korea is a prime example. The U.S. used to have 21% of the ag imports entering South Korea. Today, as other countries have pursued agreements and the U.S. has not, the U.S. share has fallen to 9%. If Congress doesn’t act quickly, we might actually see Australia complete their agreement with Korea first, putting U.S. beef at a severe disadvantage to our primary competition in the marketplace.
The most telling comment made by Vilsack this week was that across Asia, 180 bilateral agreements excluding the U.S. are in place, 20 are awaiting implementation, and 70 are under negotiation.
Populist rhetoric has been used to create anti-trade sentiment and isolationist fervor, with the mistaken notion that we have the ability to stop the ramifications of a global economy. The reality is that we don’t have that power. The power we have is to choose to be actively involved and part of the process, or to be excluded as the world moves forward.
I put diesel in the pickup yesterday and it cost me $125; if someone had come up to me and suggested we all go back to riding horses, I probably would been on board. Still, I’m not so naïve to believe that we could convince the rest of the world to erase its knowledge of the combustion engine from their collective conscience.
I think it is difficult to understand the power of the anti-trade movement, however. Even in our industry where domestic demand has been declining and export demand providing a significant economic benefit, there are those who believe that trade is somehow harmful. If an industry like ours, which is the lowest-cost producer of high-quality, high-energy, fed beef in the world, can have folks who believe that, just imagine how rampant that sentiment could be in industries that don’t enjoy as significant a competitive advantage.