Sending soybeans from Shawano to Seoul
After endless political posturing over the debt ceiling, there’s now no shortage of politicians repeating a “jobs, jobs, jobs” mantra.
As Congress returns to Washington in September, Wisconsin’s farm community will be urging it to take action on the long-shelved proposed free trade agreements with the nations of South Korea, Colombia, and Panama. Combined, they represent a multibillion-dollar booster shot in the economic arm.
While approving these three proposals might sound like a no-brainer (especially at a time when agreeable solutions seem in short supply), the politics of trade have stalled them for years. The reasons range from heavy opposition from organized labor, U.S. concerns about human rights in Colombia, and South Korea’s skittishness over the safety of U.S. beef.
For Wisconsin’s $59 billion agriculture industry, these free trade agreements (FTAs) offer real economic benefits for those who grow and make dairy, beef, soybeans, corn, fish, and processed food products.
The American Farm Bureau Federation, supported by economic analysis performed by the U.S. Department of Agriculture’s Economic Research Service, estimates that annual direct U.S. agricultural exports to South Korea, Colombia, and Panama will increase by nearly $2.5 billion per year upon full implementation of the FTAs.
In Wisconsin, the increased marketing opportunities would generate nearly $63.7 million annually and create 575 new jobs.
Not only is that good news, it comes at a time when global trade has become increasingly important for Wisconsin farmers. Surging global demand for food, the growing biofuels industry, and a weak U.S. dollar are all key drivers behind a robust outlook for U.S. farm prices. While the prices farmers pay for inputs like seed, fertilizer, and fuel all push upward, the prices they fetch for most farm commodities are at historic highs.
Farmers are feeling the effects of what foreign trade can do for their bottom lines, though it’s not always a rosy picture. When foreign demand scaled back for dairy products in 2009, the balance sheets of Wisconsin dairy farmers suffered tremendously.
The numbers associated with these pending FTAs equate to real money for local economies. Take the pending deal with South Korea, for example. If approved, Wisconsin expects to increase dairy product exports by $13.4 million per year, beef exports by another $9.8 million, and processed food and fish products would jump by $18.5 million.
The deal also spells out that South Korea’s tariffs on imports of most snack foods and breakfast cereals would become duty free within five years, and others would be nixed immediately. Wisconsin’s direct export of soybeans to South Korea is estimated to increase $1.3 million annually. Yet the greatest potential benefit for the soybean sector is said to be improved access to South Korea’s mammoth market for food-quality soybeans.
The FTA with Colombia is an example of how we’ve lost precious market access as Washington dithered. Colombia has passed its own agreements with its South American neighbors (and U.S. agriculture’s key competitors) like Brazil and Argentina, granting them preferential access to this growing market. It’s also pressed ahead with similar agreements with the European Union and Canada. It all comes at the expense of U.S. exporters, and eventually Wisconsin farmers and rural economies. Each day the FTA languishes, potential trade losses continue to grow like weeds.
This loss of market access due to inaction is why the American and Wisconsin Farm Bureaus are pushing for a congressional vote on all three of these trade agreements this fall.
It’s a matter of fairness. The U.S. market is already largely open to global imports, yet other countries impose steep tariffs on our exports. These FTAs will help level the playing field for American farmers and increase their incomes by eliminating the barriers U.S. exporters face in these markets.
It’s also a matter of economic necessity. Former British Prime Minister Gordon Brown recently told Newsweek that “the need is urgent because as Asia’s middle classes double in the next decade, its consumer market will dwarf all others, accounting for 40 percent of all global consumer spending. Without a bigger footprint in Asia, America will be left behind.”
He also noted that South Korea is one of nine major foreign economies that today buy just 15% of U.S. exports. Yet they account for 70% of all future global growth. It tells me that our nation cannot afford to sit on the sidelines any longer if U.S. industries ranging from electronics to agriculture expect to be around in the future.
Which brings us back to all the rhetoric that comes out of Washington. The three pending FTAs offer Congress an opportunity to deliver. Get them passed and then get out of the way and let our Wisconsin farmers and the global marketplace do what they do best: grow.
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