USTR - Trade Works For Iowa Farmers and Ranchers
Office of the United States Trade Representative

 

Trade Works For Iowa Farmers and Ranchers
09/09/2004

 

By Ambassador Allen F. Johnson
Chief Agriculture Negotiator

Office of the U.S. Trade Representative

 

Bracketed by the Missouri and the Mississippi rivers, Iowa is at the crux of our agricultural transportation system.  Down these mighty rivers pass billions of dollars of U.S. agricultural products each year, many destined for foreign shores.  Many of these products are raised or processed in Iowa. 

 

Iowa is the nation’s leading producer of corn, soybeans, and hogs.  It is one of the top ten producer of cattle and eggs.  Iowa’s agriculture sustains a $12 billion industry with farm and farm-related employment for 430,000 people. It is because of this success that Iowa’s farmers and ranchers find themselves in the heart of a national debate that will set the future course for the United States’ agricultural community. 

 

There are two possible visions for the future: one looks inward and is stagnant; the other is outward and dynamic.  The inward vision focuses only on supplying our domestic market.  To limit our ambitions to the domestic market is to endanger the growth prospects for this and future generations of U.S. farmers.

 

To sustain our productivity, we must recognize that a growing global economy creates new opportunities to access new customers and rapidly growing markets overseas.  Ninety-six percent of the world’s consumers live outside of the United States. 

 

As the world’s population and world food consumption continues to expand, so will the demand for the high-value products where the United States has a comparative advantage.  Nationwide, exports of agricultural products grew more than three times as fast as the total of all U.S. exports in the last year. The U.S. Department of Agriculture has forecast record agricultural exports of $62 billion for this fiscal year. The United States is #1 in the world for exports of corn and soybeans, in most years #2 for beef, and #3 for pork.

 

Exports are crucial to Iowa’s farm economy.  Exports accounted for over $3.5 billion for Iowa farmers and ranchers in 2003.  Iowa exports more corn, soybeans and pork than any other state.

 

U.S. exports to our traditional markets continue to grow. For example, soybean exports to China, largest market, have more than doubled since 1999 and reached nearly $3 billion in 2003.  Soybean exports to Mexico have also been increasing, up over 20 percent since 1999. For corn, exports to our largest market, Japan, continue to enjoy steady growth -- topping $1.7 billion in 2003 and on track to exceed that level this year.  Trade with our NAFTA partners has also continued to grow, making Mexico our second largest corn market and Canada our fourth largest corn market.  Together these countries account for $1 billion in export sales, nearly a 10-fold increase from 1993 prior to the NAFTA agreement.  Pork exports to Japan, our largest market, have grown by more than 50 percent since 1996 and in 2003 accounted for over $750 million.

 

Realizing the need to further expand markets around the world, we have negotiated free trade agreements with 11 countries in two years: Bahrain, Chile, Singapore, Morocco, Australia, Guatemala, Costa Rica, El Salvador, Honduras, Nicaragua and the Dominican Republic.  The combined population of these countries represents a market of nearly 120 million people, which is roughly the size of the smallest 38 U.S. states. 

 

We are working on agreements with 10 more countries:  Panama, Colombia, Peru, Ecuador, Thailand, and the five-nations of the Southern African Customs Union (SACU). Last year, the U.S. exported $17.5 billion to these countries, which, taken together would ranks as our 9th largest export market.

 

These new free trade agreements, when enacted, will expand opportunities for Iowa producers.  The CAFTA countries (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua) for instance, have agreed to immediately lock in zero tariff treatment for soybeans.  We also achieved new opportunities with the CAFTA countries for corn, the region where corn was first propagated, where over a million tons of U.S. corn imports will be allowed immediately without tariff and all corn tariffs removed over 15 years.   Morocco will eliminate its tariff on corn five years.  Barriers to pork exports will be removed in Australia, including some onerous sanitary requirements that have stopped U.S. exports.  Tariffs on pork will also be phased-out completely in the CAFTA countries and Morocco.

 

We are also advancing U.S. interests in the World Trade Organization (WTO) by working to level the playing field for Americas’ farmers, ranchers and growers, who often face high barriers to our world class products.  Only in the WTO can all trading partners be brought to the table to secure a comprehensive deal that benefits U.S. agricultural interests by reducing all types of trade-distorting policies. 

 

The WTO framework agreement reached July 31 in Geneva will benefit American agriculture:  eliminating export subsidies, reducing and further harmonizing trade distorting domestic support (in particular the over $80 billion a year the EU can spend on trade-distorting domestic support) and substantially increasing market access will benefit all of American agriculture.  By addressing these three pillars of agricultural trade together, all U.S. farmers and ranchers can win. 

 

Enforcing existing trade agreements is just as important as negotiating new agreements.  Many of our day-to-day activities involve foreign phytosanitary barriers – plant health issues.  Together with the U.S. Department of Agriculture’s scientists and technical staffs, we are constantly working with industry to ensure that measures imposed by foreign countries, have a scientific basis and are not unnecessarily trade restrictive.   China, as our top soybean market, has been a particular focus in recent years and last month this work paid dividends as we received assurances from China’s government that new Chinese import regulations will not interfere with trade in U.S. soybeans and other commodities.  As needed and appropriate, we initiate dispute settlement cases.  In fact, the United States recently initiated several such cases, including against EU’s restrictions on biotech products.

 

The barges will continue on course traveling down the Missouri and the Mississippi.  But we are faced with a choice on how to proceed in the U.S. approach to trade.

 

To build on Iowa’s proud heritage and ensure new opportunities for the current and future generations of farm families, we must continue to embrace the outward vision as the road to the future.  By developing export markets and continuing our long-standing agricultural heritage, farmers and ranchers can look outward beyond America’s shores to the rest of the world and to a bright future.

 

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Ambassador Allen F. Johnson will be in Davenport, Iowa, Sept. 13, for an agricultural work day and meetings to get first-hand knowledge from Iowa producers.  The perspectives which he gains will provide valuable insights with improve USTR’s effectiveness. The Iowa work day is the fifth in a series of work days that he has scheduled to help him in his job as the U.S.’ chief agricultural negotiator. Previous work days were on a hog farm in Iowa in June 2003, a cattle ranch in Montana in June 2004, a number of produce and specialty crop farms in California in August 2004, and wheat farms in Kansas earlier this month. In July, Amb. Johnson returned from Geneva, where he helped negotiate the World Trade Organization’s breakthrough framework agreement for historic reforms in global agricultural trade.  He grew up in Iowa working on soybean, corn, cattle, hog, and chicken farms. He also worked at grain elevators and feed and seed dealers, as well as building grain bins and farm equipment. His family still lives in rural Iowa.

 
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