Friday, March 5, 2010
Is the Tide Turning on Global Trade?
by Rebecca Bratter, US Wheat Associates Director of Policy
After more than a year in office, President Obama has officially unveiled his Administration’s global trade strategy for 2010. Export-dependent industries throughout the United States, including wheat producers, were encouraged to hear the President emphasize action on several long-pending pieces of trade legislation and acknowledge the critical benefits exports offer for economic recovery and job creation.
According to U.S. Trade Representative Ron Kirk, work is already underway to try to resolve issues on the pending Colombia, Korea, and Panama free trade agreements (FTAs), as well as continuing work to achieve a balanced offer in the Doha round and new negotiations on a Trans-Pacific Partnership with seven South Asian and Pacific nations.
While the timing is still unclear, some government officials predict there will be major movement on all pending trade issues in 2010. For the U.S. wheat industry, movement on trade can't come soon enough. Various trade issues are a challenge to some of our faithful buyers at a time of abundant supply. Partly as a result, U.S. wheat’s global export share has fallen to 22 percent from 30 percent in the last year. Languishing new trade deals combined with a challenging trade environment that could bring heavy tariffs on U.S. wheat exports to a number of critical markets have exacerbated an already difficult situation.
The President's Trade Agenda makes it clear that generating jobs and income by eventually “doubling” exports is a policy priority. The document also provides the clearest indication to our global trade partners that the U.S. understands how critical trade ties are both at home and abroad. USW expects this to translate into a concrete timetable for finishing several pieces of important global trade legislation.
U.S. wheat producers know firsthand what is at stake. The U.S. Chamber of Commerce reports that Colombia alone purchased $1.67 billion in U.S. agricultural products in 2008. But this will all be lost if the U.S. does not ratify the U.S./Colombia FTA soon. The scale of potential loss is very large for U.S. wheat producers. Imports by our loyal Colombian customers have been valued at an average of $165 million per year, but most of those sales will be lost to Canada if it ratifies its own trade agreement with Colombia in the next few months. While the U.S. and Colombian millers have long-standing ties and strong customer loyalty, trade diversion will inevitably occur when Canadian wheat enters Colombia at $40 per metric ton (MT) less then U.S. wheat simply as a result of their bilateral agreement.
This is but one example of how a robust trade agenda is critical to U.S. economic growth, to global economic recovery, and to meeting the President's goal of generating 2 million new jobs in the next five years. The President's Trade Agenda emphasizes assistance to small and medium size businesses. We do hope that the President takes into account that small businesses include thousands of family farms that grow wheat and operate on very tight margins to support almost one million jobs generated through agricultural exports.
We agree with Mr. Obama when he noted in his State of the Union address that "If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores." Despite long-standing global trade ties, U.S. agriculture is already losing income and jobs every day that we do not implement trade deals. We look forward to working with the President to reverse this trend. Doing so will create a robust trade environment that will allow us to enjoy the economic benefits of U.S. agricultural competitiveness and fortify the mutually beneficial trade ties with loyal customers around the world.