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Agriculture industry wary of merging trade agencies

Agriculture industry wary of merging trade agencies
If the proposed trade agency merger goes through, the White House says it will save some $3 billion over a decade and mean the government employee roles would shrink by 1,000 to 2,000. To put the $3 billion in perspective, the Pentagon alone is expected to spend around $6 trillion over the next 10 years. The government’s annual budget is between $3.5 trillion and $4 trillion. 

In a bid to shrink government, the White House has proposed merging the United States Trade Representative (USTR), the Small Business Administration, the Export-Import Bank, the Overseas Private Investment Corporation and the Trade and Development Agency, and several functions of the Commerce Department into a yet-to-be-named new agency. This would be done only if Congress grants President Obama new powers to force such consolidation.

Several agricultural and commodity organizations have come out against the proposal. Next week, a coalition of such groups is expected to send a letter to the White House expressing displeasure over the merger.

The proposal comes in an election year and would soften accusations that the Obama administration hasn’t done enough to cut the size of government.

If the proposed merger goes through, the White House says it will save some $3 billion over a decade and mean the government employee roles would shrink by 1,000 to 2,000. To put the $3 billion in perspective, the Pentagon alone is expected to spend around $6 trillion over the next 10 years. The government’s annual budget is between $3.5 trillion and $4 trillion.  

The latest merger bid comes following a similar proposal in 2011. However, there is one big difference for agricultural interests: this time, the USDA’s Foreign Agricultural Service (FAS) was left out of the plan.

A consolidation plan for trade agency reorganization “was announced during the 2011 State of the Union,” says Dave Salmonsen, American Farm Bureau Federation senior director of Congressional Relations.The Office of Management and Budget (OMB) was put in charge” of checking all the particulars.

Along with other agriculture groups, AFBF representatives “met with OMB. Last June, we sent a letter recommending against the proposal to fold FAS and USTR into some larger trade agency. We didn’t think the missions that deal with agriculture have much in common with the Department of Commerce and wanted to keep them separate.”

The new proposal, according to Salmonsen, “says nothing about the FAS at USDA, which is good. FAS needs to be kept out of this and allowed to continue the mission they’re doing well.

“This is a live issue. We’ll have further comments down the road and there’s a possibility of (congressional) hearings on it.”

More opposition

Greg Yielding, who heads the Arkansas Rice Growers Association, has been working for years to open China to U.S. rice exports. He expressed relief that the FAS was left off the proposed merger roster. “Based on initial information, we understand that the FAS and agricultural trade offices in the embassies and consulates around the world will not be included in the plan to merge trade agencies. If that’s true, we’re very happy.”

However, Yielding is “really concerned that USTR has been drawn into the consolidation. The USTR representatives do have a role in trade negotiations and are especially important with WTO issues and minimal access concerns.

“Agriculture is much different than the rest of the United States export business. You’d hate for agriculture, manufacturing and all the rest to be under the same roof. I worry that doing that would mean losing expertise that is vital for U.S. ag trade.”

Lorena Alfaro, Washington representative for the American Soybean Association (ASA), has many of the same worries. With details of the newest proposal by the White House not released, Alfaro says the Obama plan still needs to be fully assessed “but we have concerns that it would impact agricultural exports.

“That’s mostly because the USTR is already a very lean, very effective and very efficient trade agency. It has the mission of negotiating trade agreements and enforcing them. In essence, USTR opens foreign markets for all U.S. products.”

For an ASA statement on the proposal, see here.

That unique role “has been very beneficial for U.S. agricultural exports,” says Alfaro. “Having USTR subsumed under a broader government agency would, we believe, impact its ability to continue to play a coordinating role in terms for effectively negotiating trade agreements and eliminating market barriers and so forth.”

USTR’s gravitas, in part, stems “from its position within the executive office of the president,” says Alfaro. “The USTR is an ambassador of the United States and that lends it credibility with foreign trading partners. That credibility would be weakened” if the proposed merger goes forward.

Alfaro says 95 percent of the world population and about 80 percent of world’s purchasing power are outside the United States. Largely, “our growth will come from trade and more exports. USTR is uniquely positioned to open those markets not only for agriculture but all U.S. businesses.

“Considering the current global economic conditions, this is not the time for U.S. trade policy to be under a commercial or industrial agency. Agriculture in particular has a great track record in terms of boosting the U.S. brand abroad.”

Soybean exports have nearly doubled in the last 10 years alone. “That’s impressive and is partly due to USTR’s diligent work in eliminating trade barriers, opening foreign markets and negotiating Free Trade Agreements (FTAs).”

FTAs and China/U.S. rice trade

As for where the FTAs stand based on mid-January information, Alfaro says “I understand the South Korea FTA will be implemented first, perhaps as soon as February. Korea appears to be on track and we expected it to happen in the first quarter of this year.”  

In Colombia, Alfaro does not expect the FTA to be implemented until after June. “USTR and the Colombian government continue to work diligently to ensure all the provisions of the agreement fit Colombian law. There are also additional conditions with respect to labor laws and judicial issues.”

The Panama FTA could be in force mid-year. “We expect the Panama agreement to be implemented before Colombia.”

On another trade front, Yielding said plans for the Chinese to import U.S. rice are still in force. Yielding and BJ Campbell, a Missouri rice farmer and board member of the U.S. Rice Producers Association, just returned from a trip to China.

“We were in Beijing and met with Chinese government officials to discuss the rice trade,” he says. “It looks really good and they’re going through the routine of setting things up. They had a good visit here and said there had been no problems found.”

“We just need to see their final reports and documentation to know what they’ll require of the United States in order to ship rice into China. That should come after their new year’s celebration, which ends at the end of January. The Chinese new year is a big deal – like rolling Christmas, Thanksgiving, and July 4 into one.”

While in China, Yielding and Campbell met with APHIS officials at the U.S. embassy and “they remain on top of the situation. We feel very good about it. As soon as there is some movement by the Chinese government, we’ll know.”  

Yielding and Campbell also met with Chinese buyers that toured U.S. rice farms and facilities late in 2011. “They were all excited and want to do the business. They want quality rice – that’s still the deal – and they can sell it for a premium price.”

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