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Expanding ag trade critical

Although the aborted World Trade Organization ministerial at Cancun was considered “a missed opportunity” by U.S. negotiators, agriculture “still is at the forefront” of America's trade plans, a USDA official says.

“Expanding trade is critical to the future of this country and our agricultural/industrial complex,” Floyd Gaibler, deputy undersecretary for farm and agricultural services, said at the Southern Crop Production Association's annual conference at Hilton Head, S.C.

“Our trade objectives will remain the same in terms of vision and scope.”

Contrary to media reports about agriculture being a major sticking point in the Cancun negotiations, Gaibler says, “a deal on a comprehensive framework agreement was in reach. But then, they began to turn to what they referred to as the Singapore issues — trade facilitation, competition, investment, etc. — that they couldn't come to agreement on, and time ran out.” So now, he says, all the participant countries “are in kind of a stock-tacking situation.”

Gaibler says he looks for efforts to try and re-energize the Doha Round of the WTO negotiations, “but whether they'll be able to get on track and meet the 2005 timetable remains to be seen.”

Terms run out next year for two key European Union ministers, and “once they're replaced, momentum will be lost” while the new people get up to speed, Gaibler says. Additionally, the U.S. and other countries will be going through national elections, which “could interrupt continuity and momentum in moving these negotiations toward completion.”

All along, he notes, U.S. objectives in the WTO have been improved market access through tariff reductions by all countries.

To put it in perspective, Gaibler points out that U.S. trade tariffs for agriculture average around 12 percent. “That compares to about 30 percent for the European Union and 60 percent globally.

“We want to reduce these tariffs 25 percent over five years and increase tariff rate quotas 20 percent over the same period. We also want to improve export competition through phase-down and elimination of export subsidies. We're also asking for a substantial reduction in trade-distorting domestic support, with a goal of reducing that to 5 percent of the value of ag production over five years collectively.

“Countries with the highest trade-distorting payments — particularly the EU and Japan — would have to reduce their subsidies the most.”

While the U.S. is working to get new markets for its ag products, Gaibler says, “We've got to try and keep our existing markets open. As tariffs have been lowered, we've been seeing an increase in non-tariff barriers, such as sanitary and phytosanitary regulations that are being used as barriers.

“We've tried very hard to overcome these, but we've got a lot of issues with some major countries — China, our largest soybean market; Russia, our largest poultry market; and Mexico, our third-largest trading partner.

“We try to be very aggressive on an interagency basis, working with the State Department, Commerce Department, and other agencies to try and resolve these problems.”

Several regional and bilateral agreements are in progress, Gaibler says, the largest being the Free Trade of the Americas, involving 33 partner countries, a market of 800 million people, and a Gross Domestic Product of $13 trillion annually.

“It's our hope we can get an agreement on this by the end of the year. We're also working on the Central America Free Trade Agreement, covering an important market that already imports nearly $2 billion annually in ag products. The South African Customs Unit is another area we think will be a good market for our exports of coarse grains, wheat, and meats.”

Gaibler says he sees “great potential” for the future expansion of U.S. ag exports, primarily within the burgeoning middle class of emerging nations. “That's where our market opportunities are going to be.”

The USDA's Nov. 14 Agricultural Trade Update noted that U.S. ag exports for the fiscal year ending Oct. 31 totaled $56 billion, 5 percent above fiscal 2002.

The higher value was chiefly due to higher prices for beef, but other important influences were gradually strengthening global economic growth and, late in the year, depreciation of the U.S. dollar relative to competing currencies.

Imports of agricultural products rose by 10 percent, or $4.7 billion.

The U.S. export surplus fell $2 billion, or 20 percent, to just $10.3 billion — the lowest level since fiscal 1987.


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