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

 

Trade Works For Minnesota Farmers and Ranchers
09/17/2004


By Ambassador Allen F. Johnson

Chief Agriculture Negotiator

Office of the U.S. Trade Representative

 

Every day, the barges on the Mississippi, the freighters in Lake Superior, and the trucks and railcars that roll throughout the state begin the journey that carries millions of dollars worth of Minnesota agricultural products around the world.  These exports are at the core of a strong and growing agricultural economy for Minnesota. 

 

Minnesota is a leading producer of a broad variety of agricultural products including corn, soybeans, pork, beef and dairy products.  Minnesota agriculture sustains more than an $8.5 billion industry with farm and farm-related employment for over 550,000 people.  It is because of this success that Minnesota’s farmers and ranchers find themselves part 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, soybeans, and wheat and, in most years, #2 for beef.

 

Exports are crucial to Minnesota’s agricultural producers.  Exports accounted for $2.6 billion for Minnesota farmers and ranchers in 2003.  Minnesota is a top ten exporter of soybeans, feed grains, wheat, dairy products, processed vegetables, and meat products.

 

U.S. exports to our traditional markets continue to grow.  For example, soybean exports to China, our largest market, have more than tripled 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 and Canada our first and second largest market for dairy exports.  Dairy exports to Canada and Mexico have increased 50 percent from 1993 prior to the NAFTA agreement, and the U.S. enjoys a three to one surplus in dairy trade with our NAFTA partners.  Pork exports to Japan, our largest market, have grown by more than 50 percent since 1996 and in 2003 were valued at over $750 million.

 

Realizing the need to further expand markets around the world, we have concluded free trade agreements with 12 countries in the last 3-1/2 years: Jordan, 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 Minnesota 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 and have agreed to eliminate tariffs immediately on high-quality beef.  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 in six years and has opened up a market for beef that was previously closed to U.S. producers.  CAFTA countries are an important growth market for dairy products, and the CAFTA agreement will provide significant duty-free market access for U.S. dairy products immediately, and eventually a completely open market.  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. 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.

 

To continue the journey for Minnesota’s agriculture products and to 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.

 
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