World Trade: WTO, Free Trade, BSE, and Trade Promotion Authority

As I have said before, the U.S. feeds the world, and because of this we must have fair trade throughout the world. A pro-trade agenda from our government helps to strengthen our economy, grow businesses here at home, open and/or expand international markets, and can help improve relations between us and other countries. The U.S. must stay competitive in the world market place in order to continue to be a world power, especially with the emergence of Brazil, China, and India. The room for error is small and will continue to shrink, it the U.S. does not work with the World Trade Organization (WTO) and similarly pass more free-trade agreements with other countries.

The WTO is not always a popular subject and is even despised by many. However, it is now a fact of life that we will have to conduct business within this organization and its members or face financial ruin as a country. The most recent round of WTO talks, the Doha round, have been suspended for almost two years (since July 28, 2006), over other countries demanding that the U.S. cut more of its farm subsidies and other programs. Of course the U.S. resisted these demands, but only because these other countries wouldn’t reduce or do away with their tariffs, quotas, or allow greater market access to American products. Granted, subsidies can be detrimental to other countries, especially small and developing countries that depend on agriculture, but we must find a way to slowly reduce and eventually do away with these various payments so that we can guarantee greater market access and improved economic relations with other countries.

I know none of this sounds good to the row crop farmers, but it must be done for all agriculture commodities to benefit. However, we should not get rid of crop or livestock damage grants or loans, if a government has the means to help out its farmers and ranchers in a time of need, they should do so every time. But to put in an artificial market floor is not always the best option for producers, instead market situations should be allowed to dictate prices for everyone in the world. Just imagine a world without trade barriers such as tariffs and quotas, it would be a more profitable venture for everyone involved and could even bring about more peace. However, this is a long way from being accomplished, because like everything in life, trade revolves around politics and is used in many ways for countries to get what they want, only time will tell.

Currently, the U.S. Congress is in the midst of debating or has already passed free trade agreements between the U.S. and Peru, Colombia, and Panama. All of these agreements have been well thought out and negotiated, and the only thing left is for Congress to ratify them for the good of our economy. Another free trade agreement that has almost been worked out involves South Korea, however the Korean’s have been very stubborn (for lack of a better word) on the importation of U.S. beef. This trade deal could be potentially bigger and better than all three of the previous deals mentioned, but until the South Koreans accept all American beef imports (including meat with bones, and meat from animals regardless of age, but at least up to 30 months of age) no deal will be done, thereby hurting both countries.

Also the U.S. government must focus on re-establishing beef exports to all markets especially those that were large U.S. beef importers prior to the discovery of BSE (South Korea, Japan, Russia, and China). Some of these countries do currently import some U.S. beef, but maintain tight rules and regulations that handcuff our beef industry in an unfair way and these rules are not always scientific based, but more so based on human emotion. The fact is that the BSE is a dead disease, and there is now some scientific research that has begun to determine that BSE may not even cause the brain wasting disease variant-CJ disease. And because the U.S. implemented a ban on meat and bone meal being fed to ruminants, there should be no other cases of BSE in the U.S., and we also have measures in place that continue to safeguard our beef supply. Therefore, these and all countries should be able to trust our research and our food safety enough to start importing American beef just as they did before the discovery of BSE in America.

Finally, the president of the United States should be granted Trade Promotion Authority before it expires in July of 2007! This responsibility should rest with the president in order to accomplish time sensitive trade deals that may get bogged down in bureaucratic red tape if solely left up to Congress. TPA assures that the U.S. stays competitive in the arena of world trade instead of letting our competitors gain greater access for their products in other countries.

All of these issues are paramount for American agriculture, especially the beef industry, and should be focused on by all involved. By expanding free trade and the tools used to obtain it, the U.S. economy will benefit for years to come.

United States and Japanese Beef Trade

I do not refer to BSE as “Mad Cow Disease”, this is merely a term cooked up by the sensational media to grab people’s attention. I cringe when the national media reports on agriculture topics, because they usually don’t understand all that is going on, and this leads them to drawing outlandish conclusions, i.e. mad cow disease and the 7 second clip of the Holstein cow on slick concrete that turned into a 45 second clip and helped scare people and governments around the world. Anyhow on to the subject at hand:

American agriculture lives and dies with world trade, especially the beef industry. Trade agreements between countries not only stimulate economic growth, but they also broaden international markets. However, these agreements don’t always run smoothly, and the U.S. has had its fair share of disagreements with other countries on a number of issues. The most recent issue for the U.S. beef industry has been BSE, which was discovered in Washington State in December 2003. Even though this animal was determined to have come from Canada a short time after the discovery, the reaction in the markets and throughout the world was swift.

According to a study conducted by Kansas State University, the U.S. immediately lost 82 percent of its export market, more than half of that from two markets, Japan and South Korea. In December 2005, Japan reopened its markets to U.S. boneless beef but soon closed trade again after a box of veal exported to Japan was found to contain bones. And not until June 21, 2006, did Japan agree to reopen its market to U.S. beef under two conditions. The first requirement was that Japanese inspectors would be allowed to tour the 35 beef processing plants that were authorized by the USDA to export to Japan, and the second was that no vertical column material would be contained in shipments and would only consist of beef and beef products from cows less than 20 months of age.

When news of this trade agreement reached the beef industry, not everyone was thrilled about the news; but at the same time, a lot of people were just happy to re-establish trade with Japan. Many people, myself included, believed that the under 20-month requirement imposed by the Japanese was a way to get the U.S. ‘s foot in the door, and that future negoations would reflect the international scientific standard of 30 months. The 30-month standard is in reference to the World Organization for Animal Health’s (OIE) definition that cattle that have or are susceptible to BSE are older than 30 months. Anything younger than 30 months will not have BSE, which has been proven by enormous amounts of scientific evidence. But Japan has little room to talk; they have had numerous cases of BSE throughout its national herd, most of which are Holstein cattle. They have even said that they found two supposed BSE positives in Japanese cattle younger than 30 months, which is pretty hard to believe, considering that there is a mountain of scientific evidence going against these findings.

With this being the case, the U.S. can still only export beef from cattle that are 20-month old or younger to Japan. On top of this Japan has sent their inspectors to come over to the U.S. and inspect our beef packing plants to make sure they are up to Japan’s standards. I can see where this may have been an olive branch given to the Japanese by the U.S. to initate trade, but at the same time the U.S. is known for its food safety and is considered the world leader in these matters. Hell, let them come over and inspect all the plants they want to, but to constantly discount science and not accept beef from cattle that is 30 months or younger is hypocritical! Hong Kong has decided to allow beef from cattle younger than 30-months from Japan and they have had many more BSE cases than the U.S., Japan needs to go ahead and drop the 20-month old or younger restriction.

Finally, the OIE has declared that the U.S. is considered a “controlled risk” for BSE, which is just one step away from being considered to be free of BSE. This alone should make countries want to accept U.S. beef on a larger basis, but politics are politics.

This leaves a large portion of the U.S. beef supply that is older than 20 months and is of high quality here in the U.S. or exported to other countries. This is not all that bad, we have a large demand for beef in the U.S., but we stand to gain more money for American farmers and ranchers through our exports, and also gain other benefits from trade and commerce as well.