The Des Moines Register editorial board noted yesterday that, “The run-up in corn prices as a result of ethanol production means there’s less immediate need for crop subsidies. But there’s even more need for conservation funding, because increased crop production for energy will intensify pressure to farm marginal land. And there are new demands for research dollars to determine how best to grow, harvest and transport energy crops. A farm bill that’s about the future would funnel increased funding to those needs…So what happened when a House agriculture subcommittee voted on crop subsidies earlier this month? Members ducked the opportunity to lead – and voted unanimously to keep things the same.”
II. Generalized System of Preferences (GSP)
III. Food Aid
IV. Food Safety, Imports
V. Farm Bill
Ian Swanson and Brittney Moraski reported on Friday at The Hill that, “The Bush administration yesterday formally asked House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) to renew the president’s authority to negotiate trade deals, days before the current authority expires.
“In a letter to Rangel, U.S. Trade Representative Susan Schwab warned that the U.S. would be ‘on the sidelines’ without an extension of trade promotion authority (TPA), which expires Saturday.
“Without the authority, the administration still can negotiate trade deals, but Congress can amend them.”
The article added that, “The ranking member on Ways and Means, Rep. Jim McCrery (R-La.), who has worked closely with Rangel on trade, said a majority of his party would support an extension. McCrery said committee Republicans want to work with the majority to get as long an extension as possible.
“Democrats, however, are divided on whether to consider even a limited extension of fast track for Bush. ‘Fast-track authority has been used to push bad agreements through Congress that have increased our trade deficit, cost us jobs and hurt our automobile industry and other manufacturers,’ Sen. Debbie Stabenow (D-Mich.) said in a statement.
“Trade agreements with Peru, Panama, Colombia and South Korea may be considered under the existing fast-track law, which means they cannot be amended. All four deals have or will be signed before the existing law expires on Saturday.
“Votes on the Peru and Panama deals are expected this year, but the Colombia and South Korea deals are more controversial with Democrats and face an uncertain future.”
U.S. Secretary of Agriculture Mike Johanns issued a detailed statement regarding the importance of TPA to agriculture; indicating that, “Congressional reauthorization of Trade Promotion Authority (TPA) is vital to the U.S. agricultural community and overall economy. TPA provides U.S. negotiators with the authority to negotiate agreements with trading partners that can be submitted to Congress for its approval. Only with this authority will our trading partners take U.S. positions seriously and ultimately complete agreements that maximize the opportunities for America’s farmers and ranchers.
“Since Trade Promotion Authority was last authorized in 2002, U.S. agricultural exports have grown from $53.1 billion to $68.7 billion in 2006. Each billion dollars in agricultural exports support 13,400 jobs throughout America, both on and off the farm. It is no secret that 95 percent of the world’s consumers live outside the United States. At this time, almost 25 percent of our agricultural production is sold abroad, and the United States accounts for almost a fifth of all world agricultural trade.
“This year, we are forecasting the fourth consecutive year of record sales of $77.5 billion in farm exports that support 1,038,500 American jobs. Removing trade barriers and lowering tariffs will create new export opportunities for American farmers and ranchers in a fast-moving and growing world marketplace. We cannot cede our global leadership position by unilaterally tying our hands at the trade negotiating table, while our competitors secure agreements that give them better market access and put U.S. exporters at a disadvantage.”
On Friday, U.S. Trade Representative Susan Schwab noted in a statement that, “President Bush has used Trade Promotion Authority to open new markets for American farmers, ranchers, manufacturers, and service providers. With TPA, the United States was at the negotiating table, and able to reaffirm U.S. leadership in expanding the free and fair flow of commerce around the world to the benefit of the U.S. economy. U.S. exports to the ten countries with which we have implemented FTAs since 2001 have increased nearly twice as fast as U.S. exports to the rest of the world (25% vs. 13%). These exports have contributed to solid economic growth and job creation. Our agreements also provide American workers and their families a wider range of affordable products.”
Peter S. Goodman reported in Saturday’s Washington Post that, “Barring a late-hour change of heart by Democrats on Capitol Hill, President Bush tonight will lose his authority to negotiate new trade deals, the latest sign that a decades-old American campaign to expand world commerce is foundering in the face of public unease.
“Congressional leaders yesterday said they would deny the president’s request for an extension of his so-called fast-track authority — the right to ink trade deals and submit them to Congress for a simple up-or-down vote without amendments. The administration warned that without this power, its pursuit of new trade pacts would be hamstrung, jeopardizing American jobs linked to exports.
“But labor groups and Democrats in Congress countered that too many American jobs have been shed already as trade pacts have made it easier for companies to shift work to Asia and Latin America.
“Analysts cast the demise of the president’s trade powers as a sign of deepening public anxiety over American fortunes being increasingly tied to the world economy.”
Eoin Callan, in an article published today at the Financial Times Online, reported that, “Despite the big setback, [of TPA’s expiration] Ms Schwab’s domestic standing has never been higher. She is widely credited with helping restore a semblance of bipartisanship to US trade, and she described this to the FT as her proudest accomplishment.
“Ms Schwab has battled against what she describes as a ‘disturbing low-grade fever’ in Congress when it comes to trade.
“‘Trade has always been a hard sell politically,’ she says, but the task has been made harder by ‘the proliferation of television channels, cable channels, the internet, blogs’ and ‘un-checked communication’.
“This has increased ‘the capacity of demagogues to reach well beyond the beltway’, she says, empowering the anti-globalisation movement. She points out, however, that unabashed protectionist legislation is rarer than when she worked the trade beat in the 1980s as a staffer on Capitol Hill.”
In more commodity specific trade related news, Alex Daniels reported in Friday’s Arkansas Democrat Gazette that, “Over the past year, as U. S. trade negotiators hashed out a deal to lower trade barriers with South Korea, Arkansas’ Sen. Blanche Lincoln repeatedly stressed the importance of opening up Korea’s rice market to American farmers.
“But rice was taken off the table.
“‘I hit them up at every turn,’ said Lincoln, who not only represents the country’s top rice-producing state, but, as chairman of the Senate Finance Committee’s trade subcommittee, is a key Capitol Hill player on international trade. ‘At the end of the day, they bailed on us. They didn’t even throw us a bone.’
“If Congress approves the deal, South Korea would phase out agriculture tariffs that average 52 percent on U. S. commodities — on everything but rice, that is. Currently, the United States can only export 50, 000 metric tons of rice to South Korea, a small fraction of the 3 million tons of American rice that head overseas each year.”
The article added that, “No further trade talks are likely to be concluded during the Bush administration, trade watchers say. But the current round of World Trade Organization talks will play into the congressional debate over trade promotion authority.
“The United States’ trading partners in the WTO are loathe to agree to a multilateral free trade deal if the president does not have fast-track authority, according to [Hal Shapiro, a Washington trade lawyer who represented South Korea in the pending deal and served as associate general counsel at the office of the U. S. Trade Representative during the Clinton administration]. Meanwhile, members of Congress don’t want to take a tough vote on fast-track authority as long as the WTO talks remain deadlocked.”
In other trade related news, USDA’s Economic Research Service reported on Friday that, “U.S. agricultural exports reached a record in fiscal 2006 at $68.7 billion, some $6.2 billion higher than the record set in fiscal 2005. California, Iowa, Texas, and Illinois continued their reign as top exporting States; while Minnesota dropped to seventh position behind Nebraska and Kansas. North Carolina joined the top-10, displacing North Dakota at the number nine position. Feed grain exports moved ahead of soybean exports, with Iowa and Illinois dominating in those markets. California continued to dominate vegetables, fruits, tree nuts, seeds, and dairy products.”
The report noted that, “Feed grains became the largest valued agricultural export commodity in 2006 at $8.7 billion—growing some $2 billion over fiscal 2005. Nearly all of this growth is related to corn as export values grew from $4.7 billion in fiscal 2005 to $6.2 billion in 2006. While corn export value is up 32 percent, the increase is not just price related; the volume of corn shipped is also up nearly 25 percent over 2005.”
More specifically, the report stated that, “Cotton exports are up nearly 20 percent from 2005 levels to nearly $4.7 billion. Higher prices account for most of the increase as shipments rose less than 10 percent. Exports to China accounted for roughly half of the volume of U.S. cotton exports in 2006—up from one-third in 2005.
“The 2006 export value for fruits and preparations rose to $4.6 billion, up $485 million from fiscal 2005. Most of the increase for this category is for fruit (up $360 million from 2005); fruit juice exports rose $126 million from 2005 to 2006.
“Vegetables and preparations rose $273 million from 2005 to 2006 to $3.9 billion. Most of the increase was in processed vegetables. Dried beans, peas, and lentils rose $86 million, frozen vegetables rose $71 million. Fresh vegetables rose $62 billion from 2005 to 2006.”
II. Generalized System of Preferences (GSP)
Late last week, the U.S. Trade Representative’s Office issued a release, which noted that, “Ambassador Susan C. Schwab announced today the outcome of the Bush Administration’s 2006 Annual Review of the Generalized System of Preferences (GSP), a program created in 1974 that provides duty-free treatment to nearly 5,000 products exported to the United States from 131 beneficiary developing countries. As a result of this year’s review, the Administration will continue GSP eligibility for 115 exports from specific countries whose trade exceeded statutory limits in 2006 and terminate GSP eligibility for 21 products from specific beneficiary countries in order to advance a more targeted and effective program to promote economic development.
“‘Congress created the GSP program to serve as a bridge for developing countries as they increase their participation in the global trading system. It also helps to expand choices for U.S. consumers and industry,’ U.S. Trade Representative Susan C. Schwab said today.
“In 2006, U.S. imports from beneficiary developing countries under the GSP program totaled $32.6 billion, a 22 percent increase over 2005. U.S. imports under GSP constituted a significant share of total U.S. imports from several beneficiary countries, including Fiji, Kazakhstan, Paraguay, Tunisia, and Yemen.”
However, Congressional Quarterly reported on Friday that, “The top Republican on the Senate Finance Committee is continuing his push to scale back U.S. trade preferences for some developing countries that he sees as unfair competitors.
“Sen. Charles E. Grassley, R-Iowa, praised yesterday’s announcement by President Bush that certain products from Brazil, India and Venezuela will be ineligible for duty-free access to the United States. But he called on lawmakers to scale back the existing trade preference program.”
The CQ item added that, “Grassley, however, questioned why the United States provides duty-free access to any products from the most advanced developing countries, such as Brazil, India and Venezuela.
“‘These countries have actively worked against the trade interests of the United States, including by resisting efforts to cut their high tariffs on U.S. exports,’ he said. ‘It’s time for Congress to step back and begin examining the function of the GSP program.’
“Grassley raised the issue this week as Congress cleared a bill (HR 1830) extending a trade preference program for four Andean nations. He succeeded in limiting the extension to eight months, instead of the two years initially proposed.”
III. Food Aid
Reuters writer Laura MacInnis reported on Friday that, “African farmers could double or triple their harvests if rich countries were to repeal their crop subsidies and give more food aid to the region in cash, former U.N. Secretary-General Kofi Annan said on Friday.
“Annan, who retired from the United Nations last year, said it was disappointing that years of World Trade Organisation (WTO) talks had failed to produce an accord meant to make it easier for poor-country farmers to compete.”
The article noted that, “Annan, a Ghanaian national, earlier this month became the first chairman of the Alliance for a Green Revolution in Africa, a group backed by the Bill & Melinda Gates Foundation that aims to reverse Africa’s declining food production.
“Without a Doha deal, he said reaching the goal of doubling or tripling African agricultural output in 10 to 20 years ‘would be harder, but it can be done’.
“‘It can be done if all governments offer assistance, particularly food assistance, in cash and allow the purchase of locally produced goods,’ he said, noting that buying food in the region helps support and encourage local farmers.”
IV. Food Safety, Imports
Interestingly, as the trade debate continues to percolate, issues regarding imports and product safety, particularly regarding items from China, have also been the focus of recent news articles.
Nicholas Zamiska and Jane Spencer reported in today’s Wall Street Journal that, “China’s tainted food supply has fallen under heightened scrutiny after a shipment of wheat flour contaminated with a chemical used in fire retardants found its way into pet food and was linked to the deaths of U.S. animals in late March. Concerns have since soared over the safety of the country’s exports. The U.S. Food and Drug Administration recently told consumers to stop buying toothpaste made in China because it might contain poisonous diethylene glycol. Last week, the FDA sounded an alarm on farm-raised seafood from China, citing excessive levels of antibiotics and additives.
“Yet after decades of industrial pollution, some of the worst contaminants making their way into the country’s food come from the soil in which it is grown. So far it hasn’t been determined the extent to which tainted crops such as rice, fruits and vegetables have been exported to the U.S. What is clear is that in contaminated areas dotting the country, residents have been eating such food for years or decades.”
In a related item, The Washington Post editorial board stated today that, “Since the melamine affair focused public attention on the safety of food imports, many reports on the subject have been, well, nauseating. The Post’s Rick Weiss, for example, examined FDA ‘refusal reports’ on Chinese imports, finding that, over the course of a month earlier this year, inspectors turned away shipments of ‘filthy’ juices, ‘poisonous’ swordfish and scallops carrying putrefying bacteria. Anecdotal evidence such as this, along with the fact that the FDA thoroughly inspects less than 1 percent of the imports for which it is responsible, fuels fears of what is not being turned away — and what ends up on supermarket shelves.
“In response, the FDA is developing a plan to revamp its approach to food safety. FDA officials say that it will probably rely on information gathering in countries of origin, which will help prevent contamination abroad and assist inspectors in the United States in targeting the imports most likely to be adulterated. Caroline Smith DeWaal, director of food safety at the Center for Science in the Public Interest, says that the FDA’s food safety division should be modeled on that of the Agriculture Department, which requires countries to be certified in order to export meat and poultry to the United States. Others want to unify responsibility for food safety in one federal agency.
“Lost in much of the debate is that the vast majority of imported foodstuffs is perfectly safe. For now, the developing FDA approach looks promising, assuming it can reliably gather the data required to conduct an effective prevention program overseas and a risk-based inspection regime at home. Such a regime will require some additional funding and the ability to conduct audits abroad, but it should be tried and evaluated before the government rushes to create a massive new bureaucracy.”
V. Farm Bill
The Des Moines Register editorial board noted yesterday that, “The run-up in corn prices as a result of ethanol production means there’s less immediate need for crop subsidies. But there’s even more need for conservation funding, because increased crop production for energy will intensify pressure to farm marginal land. And there are new demands for research dollars to determine how best to grow, harvest and transport energy crops. A farm bill that’s about the future would funnel increased funding to those needs.
“So what happened when a House agriculture subcommittee voted on crop subsidies earlier this month? Members ducked the opportunity to lead – and voted unanimously to keep things the same.
“What unfolds with the farm bill over the next several weeks bears watching both for the matters of national interest at stake and for what the process will say about the leadership of House Speaker Nancy Pelosi and other key Democrats.
“On policy: A forward-thinking farm bill will better protect America’s soil and water and increase the nation’s energy security. It will support rural economic development, including ways to capture the energy dollars now being generated in rural areas. It will promote development of markets for locally grown food. It will ensure the richest nation in the world provides nutritious food for its hungry (more than half of farm-bill funding goes to such programs).”