Senate Ag’s Third Farm Bill Hearing Focuses on Trade Policy

August 6, 2010 Bookmark and Share

The agriculture community heard directly from U.S. Trade Representative (USTR) Ron Kirk this week on trade priorities that have stalled despite their importance to the industry’s market share around the world.

Kirk made up the first panel at a hearing held by the Senate Agriculture, Nutrition and Forestry Committee as its third session in the run up to the 2012 Farm Bill process.

Members of the panel sharply questioned him during nearly two hours of testimony on issues including the status of three pending free trade agreements and a bill that would allow greater trade with Cuba, all of which have been held up for multiple years.

Kirk insisted the three agreements – with Colombia, Panama and South Korea – could stand on their own merit, but he urged patient, careful consideration of every clause saying, “We would rather pass no bill than a bad bill…we always find a way to get the good agreements passed.”

The agreement with Colombia, where not a single U.S. product now benefits from a zero tariff, is the most pressing of the three. Canada’s recent approval of its own FTA with Colombia has reemphasized the importance of the U.S. agreements’ passage to preserve vital market share for products including wheat. Total 2010 agricultural exports from the United States to Columbia are expected to decrease by 45 percent from a year ago.

Kirk said at the hearing that Columbia is facing a significant transition of governance and, while relations with the new government are strong, any shift in power renews old fears of labor issues as well as the reemergence of the rebel Revolutionary Armed Forces of Columbia, or FARC. Kirk did add that the Department of Labor is back at the table on this issue after a long hiatus and that this development has greatly aided the process.

With regards to Panama, the USTR said his department is currently trying to respond to concerns that the country will become a tax haven if free trade is assured.

An FTA with the South Korea seems to have the best chance of passage in the near future. Kirk said the Administration is hopeful it will move before President Barack Obama meets with Korean leadership in November, though a number of Senators cautioned against hasty action as an attempt to bolster diplomatic ties.

The World Trade Organization’s Doha Round of trade talks was also discussed at the hearing. Kirk said that progress is proving difficult, but the recent addition of developing nation pressure on rapidly growing countries Brazil, China, India and Russia could have a significant effect.

A second panel at the hearing was made up of representatives of agriculture organizations, including the American Soybean Association, USA Rice Federation, National Chicken Council and National Council of Farmer Cooperatives.

When asked to name the most important steps that can be taken to increase U.S. agricultural exports, three of the four witnesses named passage of the pending FTAs, followed closely by proper funding for the Market Access Program (MAP) and the Foreign Market Development (FMD) program, both of which are used by the agricultural industry to promote trade overseas. (The fourth witness discussed the ongoing challenges with poultry trade.)

The pressing need for increased exports and the impressive impact agriculture exports have on the larger U.S. economy were major themes of the hearing.

Several participants cited a Department of Commerce study indicating that for every $1 billion of increased agricultural exports approximately 9,000 domestic jobs are created. Agricultural exports amounted to more than $97 billion last year, an increase of 100 percent from 2000 and equal to approximately 9 percent of all U.S. exports.

These gains are at risk if the pending agreements are not passed and other trade priorities continue to languish. U.S. wheat losses from a failure to ratify the U.S.-Columbia FTA alone could lead to $70 million in lost revenues per year, for instance. Committee Chairman Blanche Lincoln (D-Ark.) noted no U.S. rice is exported to Cuba today, though the country imports 700,000 metric tons annually.

In his opening statement, Ranking Member Saxby Chambliss (R-Ga.) expressed in plain terms the concerns and priorities of many in the ag industry, telling Kirk, “These FTAs are ready and represent real and tangible gains for the agriculture sector in the United States. If we are serious about promoting exports, the President should submit all three and press Congress for their immediate approval.”

NAWG and U.S. Wheat Associates are strongly supportive of immediate passage of the three pending free trade agreements and a bill to open trade and travel with Cuba. The industry is also highly supportive of the MAP and FMD programs. For more about the wheat industry’s trade priorities, please visit www.wheatworld.org/trade.