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TRANSCRIPT OF ROUNDTABLE DISCUSSION ON FREE TRADE ISSUES WITH AGRICULTURE SECRETARY MIKE JOHANNS, AMERICAN FARM BUREAU PRESIDENT BOB STALLMAN, AND NATIONAL PORK PRODUCERS COUNCIL PRESIDENT JILL APPELL, AT THE FARM PROGRESS SHOW
DECATUR, ILL. -- AUGUST 29, 2007
SECRETARY MIKE JOHANNS: Orion [Samuelson], thank you very much. Let me start out and maybe give an overview of where we are at on some trade issues, and maybe that will start some thinking going and Bob [Stallman] has been a part of this really longer than I have, so he can offer some insights. All of us panelists, I think, have an interest in trade; you do too.
If you're from Illinois, 40 to 45 percent of what you raise here goes into the international marketplace. It's significant. Just imagine what your world would be like if all of a sudden that 40 to 45 percent were in jeopardy, and the impact that would have on your bottom line and your opportunity for markets. It would be huge, it would be significant.
In the United States we developed a trade strategy during this Administration that really focuses on a number of aspects to trade to try to be successful in this marketplace. The first piece is the multilateral process. That process these days of course is Doha, the Doha Round. It's been going on now about six years, still going on. Just before the calendar turned over to August a paper was published by a gentleman named Crawford Faulkner who laid out some parameters for discussion, if you will, relative to agriculture.
The parameters dealt with domestic support, what we call subsidies, market access, and export competition. And his paper has kind of gotten people to talking about what this round might look like if it could come to a successful conclusion. But it's got a long way to go.
Trade Promotion Authority just "went away," I guess is the best way of putting it, this summer. It has not been renewed by Congress at this stage. And in fact the last time it expired it took about nine years to get it renewed. We need Trade Promotion Authority not only for the Doha Round but I believe to be successful in initiating working on trade agreements.
Now the second strategy that the Administration has initiated is a strategy that deals with free trade agreements more on a country-by-country basis. We have four of them that are pending now -- Peru, Panama, Colombia, and South Korea. We have almost an endless supply of fact sheets on those trade agreements and their implications. Those are ready for Congressional action, and I really do think that after they come back from the August recess next week, you will start to see these trade agreements queue up for Congressional action. And my hope is that before we leave, all four agreements will be approved.
Now suffice it to say - because, again, I could go country by country but we don't have enough time for that today -- that what these agreements really do is level the playing field. Today if you want to trade with these countries, you're going to have a difficult time. Tariffs are going to be high, market access is going to be difficult. With each of these agreements, tariffs come down. In some cases they come down dramatically immediately, and in other cases tariff reduction is phased in over a period of time. It just depends on the product that you're talking about.
The overall picture in trade, and this will be the last part of my thoughts, is this: We have set records in exports probably four out of the six years that the President has been in office. This year our exports will be about $77.5 billion. It is a significant part of the agricultural economy. You oftentimes read about the trade imbalance with China. It is real, of course. I will tell you though, in agriculture the trade imbalance is in our favor. We sell more to China in agricultural products than they sell to us.
The bottom line for me is this: I've been all over the world, I've seen agriculture in the poorest of the poor countries, to our major competitors, and I just firmly believe that you can compete with anybody in the world if you have a level playing field. These trade agreements are designed to do exactly that, to level that playing field, to give you the market access, to lower the tariffs so you can compete in that international marketplace.
MODERATOR ORION SAMUELSON: Thank you, Mr. Secretary.
Talking to Bob Stallman, President of the American Farm Bureau, earlier today -- Bob is from Texas. He said, "You know, this is a pretty comfortable spring day in Texas." So he's feeling right at home with the weather we have up here. For his thoughts, Bob Stallman, President of the American Farm Bureau Federation.
BOB STALLMAN: Thank you, Orion. You can tell by the sweat running off my bald head that we sweat in Texas too, folks. Trade matters to American agriculture. That's the message today, that's the message that we have to continue to deliver as ag producers. Sometimes even farmers and ranchers forget that, but we did a two-year analysis of the future of agriculture and if you had no trade, as some advocate in this country, that we ought to seal up the borders, somebody has to figure out what to do with 75 million acres of land in this country used to produce products that are exported. I don't want to have to be the one to choose which one of you is going to farm and which one of you isn't. But you understand the importance, and I'm glad you're here today.
We do have a two-pronged trade approach now. American Farm Bureau has been working very closely with the Secretary, our U.S. trade negotiators, in this WTO round, but it is in the doldrums right now primarily because other countries really do not want to open up their markets to our agricultural products. That's the biggest sticking point at the present time.
But at the same time we have a secondary agenda. If that's not going to work in the short term, let's move forward and negotiate with the willing. Let's negotiate with countries willing to have trade deals that truly open up markets. We've done that; we've successfully completed four trade agreements -- Peru, Colombia, Panama and South Korea -- that are ready for congressional action when they come back, depending on the way they are presented up there in terms of order. But all of those agreements, those four agreements, if enacted, would mean $3 billion in additional export market for America's producers.
Now that's a good number, and if you add that on to our record exports, that would just would set another record. It's important that we get that access.
A fairness issue arises even with some of these, particularly Peru and Colombia. Under the Andean Trade Preferences Act those countries already have basically free access into our market. All we want to do through these agreements we have with them is for them to return the favor and open up markets to our product.
So this isn't even, in the case of those two countries, giving them additional access; they already have that access.
When we move to South Korea, that is, thus far -- and I think the Secretary would agree with this -- for agriculture the best bilateral FTA that has been negotiated thus far. We are estimating that it would add $1.6 billion in export growth into American markets. We have a little problem with South Korea though, folks. They are still not taking our beef the way they ought to, and the Secretary and his team have been working double overtime on Korea and Japan on that particular issue. But we say that they need to open up their beef market under international standards before we would consider them a reliable enough trading partner to support the Korea FTA. But progress is being made, and so we're hopeful that will occur.
And the last issue, which the Secretary already mentioned, was Trade Promotion Authority. Folks, when that expired that in essence eliminated the ability of our negotiators to go out and negotiate further good deals for American agriculture. Without that, our competitors are going into these same markets that we could have access to if we could negotiate agreements, and undercutting our current trade arrangements. Any administration should have Trade Promotion Authority, and that's going to be a tough haul in the Democratic Congress probably to get that passed in the short term. But for the long term for the benefit of American agriculture we need Trade Promotion Authority. So I hope when that time comes, when that legislation comes before the Congress, those of you out there will weigh in with your voices. Thank you.
MODERATOR: Our third member of the panel is representing an industry that has certainly watched the export market grow for American pork producers. Matter of fact, last Friday it was interesting watching hog futures at the Mercantile Exchange jump up nearly $3 because of a story that we were going to sell 60 million pounds of pork to China. So it's a market that has been very important to the export side of American agriculture. Representing the pork industry today from Illinois, Jill Appell, President of the National Pork Producers Council. Jill?
JILL APPELL: Thank you, Orion. It's a privilege for me to be here and be on the panel with the other two panelists. You may wonder why the pork industry would be here when we're talking about basically grains. But pork is really involved . The hog industry is so involved in consuming your product that it makes a big difference to you if we're successful also. International trade is a growing part of the U.S. pork industry success. In 2006 the United States exported 1.3 million metric tons of pork valued at $2.9 billion. This is a 9 percent increase over our 2005 exports in volume and an 8.7 increase in value terms. And in 2006 it was the 15th straight year of record pork exports.
The top eight export countries for the U.S. in 2006 were Japan, Mexico, Canada, China, Korea, Russia, Taiwan, and Australia. The Center for Agricultural and Rural Development at Iowa State University has calculated that U.S. pork prices are $33.60 per hog higher than they would be if we did not have any exports. That is what has kept the pork producers profitable over the last three-plus years.
Then this success story is a direct result of free trade agreements. U.S. exports of pork and pork products really took off following the implementation of the 1989 U.S./Canada Free Trade Agreement, and since then our exports have increased by a phenomenal amount. Actually they've gone up every year in the last 18 years so that's really been because of free trade agreements. They are extremely important.
We have, as the other panelists mentioned, four free trade agreements that are pending. And these are very important to the pork industry. We are working as hard as we can, talking with Congress, to make sure they understand what a benefit these four agreements would be for agriculture, and specifically we are discussing the benefit they would be for our industry, the pork industry.
As the benefits from the prior agreements begin to diminish, these negotiations become more and more important. As you may well know the productivity has increased in the pork industry, and so we have more pork to sell. And we need to have expanded markets. And we still don't have adequate access in many of the markets. It's amazing to know, an amazing fact, that the average global tariff on pork is 77 percent, which is just amazing to us that it's that high.
According to Iowa State economists, when the trade barriers are lifted the pork producers will experience unprecedented economic benefits. And the one trade agreement that means the most to us, although they all will have benefits as Bob pointed out, the Korean Free Trade Agreement will be phenomenal. We have an economist at Iowa State, Dr. Dermot Hayes, who runs profiles for us on what the difference will be when these free trade agreements are passed. He said when he ran the one for Korea, he thought there was a mistake in his material he'd inputted, that it couldn't possibly be that good. So he did it again and again, and every time it came out the same. When the South Korean Free Trade Agreement is fully implemented, it will mean $10 a pig for producers, which is an amazing amount. We will have a better market in South Korea than we have in Japan, and Japan is our number one market. So we are going to be working very hard, and it's going to be an uphill battle to try and get the Korean Free Trade Agreement passed.
Bob also mentioned the Andean Trade Preference Act which has given access to Peru and Colombia for their products. And our country doesn't have access to their products, and so it would be adding no additional access to those countries to pass those two free trade agreements. And we believe that our producers deserved the same privileges that the producers and the people in Colombia and Peru have.
In a recent letter signed by over 40 agricultural associations including the National Pork Producers Council, we urged Congress to provide reciprocal market access benefits to U.S. farmers, ranchers, workers, and businesses in implementing the free trade agreements with Peru and Colombia.
To sustain and increase exports, NPPC and the nation's pork producers are committed to fighting for free and open trade. There's a great potential for pork producers in the international market, and it's essential for our industry to take advantage of these and work as hard as we can to make sure that foreign markets are open for our product. Thank you very much.
MODERATOR: Thank you very much, Jill and Bob and Secretary Johanns.