Sharing America's Bounty Through Trade
American Farm Bureau
President, American Farm Bureau
Whenever farmers and ranchers look for ways to improve our economic situation, the talk soon turns to trade. Negatives and positives surface quickly that we let too much cheap stuff in to overwhelm our domestic markets or we cannot move enough of our high-quality agricultural products out to satisfy the cravings of discerning consumers. Most of us recognize the great productive capacity and efficiency of America's farm families and the need to market to the 96 percent of the people who live outside our borders.
To expand our foreign market opportunities and to ensure fair competition at home, Farm Bureau again is working closely with U.S. trade negotiators as they discuss reforms during the current World Trade Organization talks. I think it is crucial for us to play this role. In all my travels in farm circles, I have yet to hear one producer say, "Things are great and we don't need any changes in trade."
We can identify many areas that put us at severe competitive disadvantages. Our country's reform proposals spell out the areas that need the most immediate attention. The package laid out three months ago aims to eliminate export subsidies, reduce market barriers and curtail trade-distorting domestic policies. It is a bold, aggressive package that is well within the policies written and supported by Farm Bureau families. Last month, several state Farm Bureau presidents and I went to Geneva, Switzerland. Our main purpose was to deliver the message to other nations that American agriculture supports our U.S. negotiating proposal.
Although previous trade negotiations have offered us some improvements, there is still a long way to go before we compete on a level playing field. Those nations that have an advantage want to keep it. So the people we talked to from Europe and Japan disapproved of the U.S. proposal. Other developed countries that are major exporters who do not rely on massive subsidization for agricultural success cautiously approve of the U.S. plan. And developing countries favor any and all reductions of trade-distorting policies, as long as they are not required to reciprocate.
Since the protectionist debacle of the 1930s that greatly contributed to the "Great Depression," the U.S. has become a very open market to foreign farm goods. On average, we impose a 12-percent tariff on incoming goods. Yet, our farm exports face additional charges of an average 62 percent around the world, 31 percent in the European Union. It is not fair. The U.S. trade proposal calls for nations to cut tariffs proportionally, not just by some percentage. This would reduce the great disparity in tariff levels we see now.
Another concern under the current WTO system, the European Union spends $100 for every $1 we spend on export assistance. This is unfair, especially when our program is aimed at recapturing markets we have lost to over-subsidized, under-priced goods. The U.S. offers a simple solution to this one. Eliminate all export subsidies.
When you look at the amount some nations spend to support farming, the peaks and valleys of the playing field become apparent. The U.S. spends $49 an acre. The European Union spends $309 per acre and Japan spends $4,606 per acre. The U.S. proposes to limit such spending to a percentage of the value of each country's total ag production.
There are more issues, such as the need for a more rapid and responsive dispute settlement process and letting science rule in health and safety debates. And, there are a lot more details but the three pillars of the U.S. proposal define the bull's-eye of our trade reform target for now. So far, no other country or bloc has gone as far as the U.S. to put a proposal on the table. U.S. ag exports were $53.5 billion in 2002 and are expected to climb to $57.5 billion in 2003, a value increase resulting mainly from higher commodity prices because of drought. With a more level playing field in trade, that number will grow higher faster for U.S. farm goods because of market opportunities. Farm Bureau will closely monitor and work with our trade people to make sure the best interests of America's farm and ranch families are well represented.