President signs three free-trade agreements
After four years of other countries making trade agreements with Panama, Colombia, and South Korea, President Obama signed legislation Oct. 21 that will soon open U.S. markets to these countries. The American Farm Bureau Federation estimates that the three agreements represent nearly $2.5 billion in new agricultural exports for America’s farmers and are expected to create economic growth that could generate support for up to 22,500 U.S. jobs -- including transportation workers, food processors, packers, and others.
“America has been handed a good deal,” said U.S. Rep. Henry Cuellar, the founder and chair of the Pro-Trade Caucus, in an Oct. 12 press release.
“The free trade agreements with Panama, Colombia, and South Korea are not only beneficial for U.S. companies and our international relations ...,” Cuellar said. “The deals have economic significance at home and abroad; it is estimated the trade deals could increase U.S. exports by $13 billion annually, reduce tariffs, and strengthen foreign relations with key strategic partners.”
For a brief summary of the free trade agreements, see “Free trade snapshot below.”
Ag commodities groups echoed Cuellar’s sentiments.
According to an Oct. 13 U.S Grain Council press release, the United States exported 95 percent of the 3 million tons of corn imported by Colombia in 2007. In 2010, the U.S. share was less than 20 percent, as Colombia’s imports decreased to 700,000 metric tons.
“We have a shipping advantage from the Gulf ports, and we have historically been a trusted partner and preferred provider for grain exports in the Caribbean Basin,” said Dr. Wendell Shauman, U.S. Grain Council chairman.
The National Corn Growers Association, in an Oct. 12 press release, addressed how the United States -- the world’s largest producer of corn, exporting 50.4 million metric tons in 2010 -- has lost markets, due to other trade agreements.
“Since the EU-Korea trade agreement went into effect July 1, European exports to Korea have increased 36 percent from a year earlier,” said Garry Niemeyer, National Corn Growers Association president. “U.S. farmers have already lost more than $1 billion in sales to Colombia in the two years since that country implemented a trade deal with Argentina and Brazil.”
While the assorted grain councils and ag groups speak favorably of these agreements, the beef groups are not in consensus.
The National Cattlemen’s Beef Association (NCBA) anticipates $200 more per head for live cattle exported than currently received. An Oct. 21 press release cited data from CattleFax that “reports the average per head value of exports to live cattle to exceed $200.”
The Texas and Southwestern Cattle Raisers Association stated in an Oct. 12 press release that beef exports will rise by an estimated $3 billion.
“This is good news for Texas, the largest cattle-producing state in the nation,” said Joe Parker Jr., rancher and president of the Texas and Southwestern Cattle Raisers Association. “Passage of these agreements will not only add additional exports for Texas beef, but will help speed up our industry’s recovery from this unprecedented drought.”
While ag groups supported the agreements, the U.S. Cattlemen’s Association asked for Congress to address the free trade agreements individually, not as a package. In an Oct. 12 letter to Congress, the U.S. Cattlemen’s Association supported the Korean trade agreement and remained “neutral” to the Panamanian Free Trade Agreement.
The Colombia Free Trade Agreement “... contains several points of concern for the nation’s cattle industry that have yet to be addressed by the Administration and Congress,” wrote Jon Wooster, president of the U.S. Cattlemen’s Association.
“The market access available through the Colombia FTA would effectively increase the supply of beef products entering the U.S. marketplace,” Wooster continued. “Without proper safeguards, the nation’s cattle industry will be susceptible to increased price fluctuations and unfair market access.”
The cattlemen “requested an adequate origin classification system in Colombia be in place prior to the passage of any trade agreement. Colombia shares a border with Brazil, a country which produces over 170 million head of cattle, a figure which far surpasses the number of cattle in Canadian and Australian herds. Per an existing agreement between Colombia and Brazil, Brazilian cattle processed in Colombia will have access to U.S. markets. Opening the United States to Colombian beef will essentially open these same markets to trans-shipment of beef into the United States from Brazil.”
Free trade snapshot
According to data provided by U.S. Rep. Henry Cuellar and the American Farm Bureau Federation, the United States can anticipate that:
•The agreements will advance international trade and increase U.S. exports by $13 billion.
•The U.S.-Colombia Free Trade Agreement will expand exports by more than $1.1 billion, due to tariff reductions. The agriculture sector will gain $370 million.
•The Panama agreement will provide the United States with new access to Panama’s $21 billion services market, including “financial, telecommunications, distribution, computer, energy, express delivery, environmental, and professional services.” The ag sector will gain $46 million in exports.
•The South Korean agreement will support 70,000 American jobs. U.S. exports may increase by more than $10 billion, with the ag sector to gain $1.9 billion. It also expands the market access for American automobile companies and auto workers.