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Serving: United States

Trade tension heats up

Naysayers and supporters of free trade agreement continue to make their views known on how trade impacts agriculture.

March marked the three-year anniversary of the last trade agreement the United States ratified – the Korea-U.S. Free Trade Agreement. Many herald the FTA as a success, while others have used it as a pot to stir continued opposition to increasing trade opportunities as similar provisions could be included in the currently negotiated Trans-Pacific Partnership agreement.

According to a fact sheet from the U.S. Trade Representative’s office, U.S. exports of key agricultural products benefiting from tariff cuts and the lifting of other restrictions under KORUS continued to post significant gains in the three years since going into effect.

Last year’s 31.2% growth in farm exports to Korea was nearly seven times faster than U.S. agricultural export growth to the world at large. Some particularly striking examples include dairy products, meats, nuts and fruits. 

The U.S. Dairy Export Council recently wrote a blog which shared three ways the agreement has helped U.S. dairy. Shawna Morris, vice president of trade policy for the National Milk Producers Federation, said that agricultural negotiations with Korea were not easy, but it also provides a model for future agreements, such as TPP, to follow.

“Dairy in particular was a tough sector where ultimately U.S. negotiators had to settle for less than full tariff elimination in a few cases,” she said. “But in all product areas, including those where tariffs do not zero out, opportunities for access to the Korean market are allowed to grow over time. This expansion is possible either by doing away with duties or by continually expanding tariff-rate quotas.”

Secretary of Agriculture Tom Vilsack held a conference call with business leaders the afternoon of April 3 and urged them to share the positive story of agriculture’s need for increased trade opportunities. And the fact that 30% of all ag sales are in one form or another related to ag exports, it translates into the net income farmers see each year.

Kent Baucus, associate director of legislative affairs at the National Cattlemen’s Beef Association, said he expects to see Congress advance Trade Promotion Authority legislation in the “very near future.”

“The good outweighs the bad that these fear mongers are trying to drive out,” Baucus said. “There is enough support and positive momentum moving forward that we’ll have a TPA vot soon.” Baucus he added there is support in the Senate, House and the White House to make that happen, but the goal is when it does come up, the goal is to pass it “overwhelmingly.”

Vilsack also shared the “window of opportunity” is closing on TPP if Congress doesn’t pass TPA this year. A presidential election year will only complicate passage and could stall an agreement with the Asian countries.

Opposition continues

Nebraska Farmers Union President John Hansen, who has been actively involved in trade policy for 30 years, said recent trade agreements have “consistently given away access to our own market.” He said the prominent ways this is being done is from competitors who manipulate currency 5-20% and also added value added taxes.

Currency manipulation allows governments to keep their currencies undervalued and boost exports, limit imports and create large current-account surpluses. Hansen said the Farmers Union has been raising the issue of currency manipulation since the mid-1990s. With VAT and currency putting U.S. products at a 25-35% distortion, a level playing field isn’t occurring.

“We’re not having a fair opportunity to be able to sell our products into other economies,” Hansen said.

Roger Johnson, president of the National Farmers Union, said currency manipulation is the main reason NFU opposes TPP.

“The U.S. deficit with Japan reached nearly $80 billion in 2013, and currency manipulation was the most significant cause of the deficit,” notes Johnson. “It is estimated that the trade deficit with Japan alone resulted in 896,600 jobs eliminated in the nation across nearly all congressional districts.”

Johnson in a guest column in The Hill said that the trade deal with South Korea, has failed to meet its promises as well. “When we signed this deal, the American public was promised an increase in exports and at least 70,000 new jobs. Instead, our exports to South Korea are down and we’ve lost 84,000 jobs. For every new U.S. car sold to Korea since we signed the deal, they sell us 14 new cars, all made with jobs that could and should be here.”

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