With apologies to Gordon Gekko, the fictional investment banker from the movie “Wall Street” — Trade is good. Trade works. For U.S. pork producers, it has been good and has worked well since 1989.
That’s when the U.S./Canada Free- Trade Agreement was implemented. Since then, U.S. pork and pork product exports have grown from $394 million to more than $2.6 billion. American pork producers now ship 3.6 billion pounds of pork overseas.
Today, pork producers receive $33.60 more per hog marketed because of exports, which in 2006 amounted to 15 percent of U.S. production. (It’s an economic truism that all producers, regardless of whether their product gets sent abroad, reap the benefits of trade, which is higher prices for their hogs.)
Without exports, points out Nick Giordano, international trade counsel for the National Pork Producers Council, the U.S. pork industry would have to cut production, which would mean a reduction in the size of the industry. Giordano, who works closely with the White House, the U.S. Trade Representative and USDA to secure favorable treatment for pork in U.S. trade pacts, says American producers need more access to foreign markets.
There’s already strong demand for pork products worldwide. Pork represents 44 percent of global meat protein intake, far more than beef and poultry. With 96 percent of the world’s population residing outside of the United States, it is essential that America’s exporters continue to gain access to more of those potential customers.
Trade agreements create access, and there are several pending deals that would boost U.S. pork exports; the biggest one being the World Trade Organization Doha Development Round. A successful pact could reduce tariffs on U.S. pork products significantly below the current average of 77 percent and give U.S. producers more access to the lucrative markets of Japan and the European Union’s 25 member-countries. The United States has concluded free-trade agreements with Peru and Colombia, and is in the middle of negotiations with South Korea and Malaysia.
However, the U.S. Congress must approve those agreements — and there’s the rub. Getting Congress to pass free-trade agreements has been getting harder in recent years. With the Democrats’ recent take over of the U.S. House of Representative and Senate, there’s even more uncertainty ahead. Consider that the multilateral deal with the Dominican Republic and Central American countries (DR-CAFTA) passed the House in 2005 by just two votes. While that measure got through the Senate on a 55-to-45 vote, pro-trade Republican Senators George Allen, Va.; Lincoln Chafee, R.I.; Mike DeWine, Ohio; Rick Santorum, Pa.; and Jim Talent, Mo., all were ousted last Election Day. Also, pro-trade Independent Jim Jeffords, Vt., retired.
“Dark clouds must now loom over the approval of any free-trade agreement brought before the new Congress,” say Simon Evenett and Michael Meier, with the Swiss Institute for International Economics and Applied Economic Research. In a November 2006 analysis, they found that six Senate and 16 House “trade-friendly” members were replaced by “trade-sceptic” candidates.
Toss in the fact that President Bush’s Trade Promotion Authority, which requires Congress to consider agreements without adding amendments, expires in July. Now, “the hurdles have gotten higher and longer” with respect to passing free-trade agreements, adds Bill Antholis, strategic planning director at the Brookings Institution in Washington, D.C. “Certainly it will be an uphill battle.”
So, U.S. agriculture in general, which enjoys a trade surplus, and the pork industry specifically must step up the fight for trade. That means letting congressional lawmakers know how important exports are not only to your bottomline, but to the U.S. economy as well. (U.S. meat exports have added more than 200,000 jobs, according to USDA.)
"We need pork producers to tell their senators and representatives that trade agreements are vital to the industry's continued success," Giordano says.
Trade also offers benefits beyond America’s shores. Increased access to China’s markets, gained through its to the WTO, has led to tremendous changes in that country. There is a rising middle class and even a subtle transformation in its communist government. It’s hard to keep democracy and free-market ideas out once the trade door has been opened.
There also are national security implications related to some trade deals. Failure to pass the Peru and Colombia agreements could force those nations to turn to neighboring Venezuela and its anti-U.S. strongman Hugo Chavez for economic companionship.
Trade has been a real success story for the U.S. pork industry. Yet, the continuation of that story hinges heavily on efforts to expand agricultural trade liberalization throughout the world. The task at hand is to convince Congress that trade is good, that trade works.