Agriculture and Free Trade: An Impossible Dream?
February 10, 2004
Our trade negotiators must feel like Don Quixote in pursuit of the impossible
dream. Read how special interest groups and their supporters in Congress try
to make negotiating free trade agreements as futile as tilting at windmills.
Our trade negotiators work extremely hard to craft meaningful trade agreements,
but find themselves forced to walk a very fine line by special interests and
their supporters in Congress, who threaten to vote down any agreement that
doesn't meet their demands. Caught between a rock and a hard place, they must
choose between sticking to their free trade principles and crafting an agreement
that might not be passed by Congress, and negotiating a trade agreement that
is severely compromised, but acceptable to the protectionist special interests
that control many votes on Capitol Hill.
One of the most entrenched special interests, the sugar producers' lobby,
has recently flexed its political might over the issue of freer trade in sugar.
Not too surprisingly, the sugar lobby loudly protested over efforts to liberalize
sugar trade as part of Free Trade Agreement negotiations with Australia and
succeeded in keeping sugar out of our market. The Bush Administration, responding
to the hue and cry of sugar lobbyists, recently told the Australians that
it will not negotiate any new terms for sugar access into the United States
as part of the FTA. Many worry that this most recent declaration by the administration,
may countermand earlier promises of "no exemptions." The Australians,
eager to conclude an Agreement that would benefit many other sectors of its
economy, reluctantly agreed. The political fall-out in Australia has been
huge.
The exclusion of sugar from the Australian agreement is a problem for many
reasons. First, once one commodity is excluded from negotiations, all others
will come knocking on the door asking for their exemption. How can the Administration
say no to every other agricultural producer once it has said yes to the sugar
producers? It really can't. And if it can't, then our "free" trade
agreements are not free at all. Access to our agricultural market is one of
the biggest chips the U.S. has to offer to gain access to foreign markets
for exports of American products. To remove this chip from the bargaining
table will hurt an enormous number of Americans who would like to export their
products.
In addition, failure to liberalize our own sugar market is a huge disservice
to American consumers. An FTA that includes sugar increases competition in
the U.S. market, enhancing efficiency and benefiting industrial and retail
consumers. Sugar from Australia would have provided much-needed throughput
for the hard-pressed U.S. cane refining industry, which has lost over 5,000
jobs since 1981. A more competitive sugar market would help reverse the disturbing
trend of job losses in the confectionary industry, which have amounted to
7,500-10,000 lost jobs in just the last six years.
Other special interest groups that guard their market share zealously, including
dairy producers and cattle ranchers, have also lobbied the Administration
and Congress for years to limit imports at the expense of retail consumers
and industries dependent on imports of competing products. In the recent FTA
talks with Australia, the U.S. offer in these two commodities fell far short
of free trade: A 25 year phase-out of the quota and duty on beef and dairy
imports, which would be "offset" with a safeguard mechanism that
could restrict imports even during the phase-out.
The beef provisions alone ought to offend every consumer in America. The U.S.
buys quite a bit of Australian Beef for use in hamburger products that show
up in your grocery store or at the fast-food restaurant. Existing beef quotas
keep prices high, make supplies unpredictable, and interfere with an orderly
market. All of that translates to higher prices for hamburger. The Australian
Free Trade agreement ought to have been the place where we could negotiate
an end to this kind of high-cost protectionism. Equally important, the elimination
of these quotas would be good for U.S. meat processors who employ many Americans.
Likewise, U.S. dairy policy could use a little house-cleaning, too. The average
tariff on dairy products is 43%, ten times higher than the average American
tariff of 3 to 4%. Prices for products using milk protein, and other dairy
products, will remain artificially high if quotas and tariffs are not reduced
in a meaningful way. The Australian FTA, and other trade negotiations ought
to be a place where we can make some first steps toward freer dairy trade.
With over 280 million consumers in the United States, U.S. trade negotiators
should keep in mind the ultimate cost of trade barriers is borne on consumers.
The bottom line is that failure to work on our most egregious import barriers
in products like beef, sugar and dairy will not only be detrimental to U.S.
consumer interests, it will have a negative impact on U.S. agricultural interests
including growers, producers, processors and food exporters. It will set a
horrible precedent for free trade agreements to come, and provide a terrible
example to our trading partners of what is acceptable in "free"
trade negotiations. The United States can and must do better.
Read CWT's letters to Congress on sugar
and
beef and dairy in the U.S.-Australia Free Trade Agreement. Click
here to read CWT's blast fax on U.S. sugar policy.