Trade in Turmoil
WTO stands for World Trade Organization, that body to which the United States and the European community both belong, along with a host of other nations. It is supposed to see that trade rules are followed, passing judgment when there are disputes. But WTO might as well stand for “Whether To Obey.”
Take the recent decision by the European Union (EU) to slap duties on some U.S. exports that could top $300 million by year’s end. The WTO ruled against the United States four years ago, saying that the EU would be justified in sticking U.S. exporters with up to $4 billion a year in duties if we didn’t repeal some of our export subsidies which had been deemed illegal by the world body.
The tariffs started in March at five percent of a product’s value, slated to go up one percent per month that Congress doesn’t act. Congress, even if it were to eventually ax the subsidies in question, wouldn’t likely do so by year’s end, the way congressional matters slowly crank. Also, many lawmakers thought the EU wouldn’t actually do anything – after all, four years had elapsed since the WTO decision – so they have been caught off guard, in an election year, no less.
EU Trade Commissioner Pascal Lamy vowed the sanctions won’t be lifted “until the day Congress passes the necessary legislation.” It comes as no surprise that targeted products, such as citrus, textiles, paper products, and iron and steel are politically sensitive here.
Note that while the EU is slap-ping American wrists for not abiding by WTO decisions, it has blithely ignored a WTO ruling for several years concerning beef trade with the United States. The EU has chosen to pay sanctions on beef exports coming here rather than obey WTO.
In a political climate where manufacturing and even some technical jobs continue to slip away from American turf to foreign soil, the EU sanctions could put even more pressure on politicians. There has already been plenty of hue and cry about “how dare we listen to foreigners” about how to do things here at home. But likewise, there will be a call for more help to those industries hit by the sanctions.
Watch how this shakes out as any trade turmoil could affect renderers on down the road.
Unhappy Aussies
On another trade front, the Australian beef industry isn’t too happy with how the Free Trade Agreement between the United States and their country worked out. Their biggest gripe: no increase in the U.S. quota on Aussie beef imports is likely for three more years. And by the in-dustry’s standards, the quota will only go up a paltry amount over l8 years.
The quota will, at most, increase 70,000 metric tons – “equivalent to less than two days of U.S. beef production,” according to Meat and Livestock Australia (MLA). That amount, compared with how much beef Americans eat, will be “tiny,” said MLA.
Balancing Act
It may seem like pie-in-the-sky wrangling to most of us, but politicians in Washington, DC, are spending a great deal of time and rhetoric on how to cut the federal deficit in half – and by when.
President Bush says that if Congress would approve his 2005 budget (and those of his through another term in office) the deficit would be halved in five years. The Senate Budget Committee says that its plan would do the trick by 2007.
The Congressional Budget Office agrees that the president’s proposal should significantly reduce the deficit within five years but would not halve it. The Senate Budget Committee will likely have a hard time convincing the full Senate to make even more drastic cuts than that of the president.
Trying to predict how much some entitlements and open-ended programs will actually cost next year is dicey enough, though, let alone projecting five years from now. Of course, during an election year, both the president and lawmakers want to be viewed as fiscally responsible, yet absolutely committed to what a lot of their constituents hold dear.
Keeping Americans safe, whether from terrorists, bovine spongiform encephalopathy (BSE), or other real or perceived threats is top on the list – right up there with cutting taxes. After that, it becomes a delicate bal-ancing act between special interests.
Budget Winners – and Losers
The president’s U.S. Department of Agriculture (USDA) budget proposal for 2005 calls for $82 billion, an increase of about $4 billion, or about five percent. Of course, that includes both mandatory and discretionary spending – the bulk of which is mandatory. According to the administration, discretionary spending would drop by three percent below current levels, to $20.8 billion for 2005.
Some $38l million of the discretionary spending would be earmarked for food security – protecting agriculture from terrorism. The single biggest item is $178 million to finish renovation of the Ames, IA, animal research center – now called the USDA National Centers for Animal Health. The facility is expected to be renovated by the end of 2007.
Note that one of the losers in the discretionary budget is biofuels. Nearly $100 million would be cut from programs that now pay farmers to use renewable energy or develop it for outside use.
A move was already on to put that money back into the budget. Congressman Marcy Kaptur (D-Ohio), ranking member on the House Agriculture Appropriations subcommittee, vowed to push hard to restore them. It could be an uphill battle, however, since huge mandatory spending commitments, coupled with increased spending to allay BSE and other food safety issues, have already led to a record USDA budget request.
Feed Has Rights Too
The Food and Drug Administration (FDA) plans to set standards for health claims made about foods and human dietary supplements. Therefore, says the American Feed Industry Association (AFIA), it should also set them for animal feeds and pet foods.
AFIA is eager for consumers to see that their products meet some sort of federal standard – a sort of “Good Housekeeping” seal, if you will. In fact, AFIA is ready to argue that the FDA would be violating the Constitution if it doesn’t treat qualified health claims for animal feed in the same way that it would treat health claims for human food.
Flu Fears
As if the specter of BSE weren’t enough, avian influenza – bird flu – has also hit the news and the United States this year. Take this Washington Post story, titled “A Horror Script for Health Officials…Bird Flu Poses Global Epidemic Threat”:
“The metaphor that public health officials invoke when talking about a global flu epidemic is the same one that lies at the heart of the scariest horror movies.
“It is the idea of a small and deadly thing that is poking and prodding for a weak spot in whatever is protecting its intended victims. It is patient, because it knows it will eventually succeed. When it does, a horrible metamorphosis makes it huge and unstoppable.”
After this grim introduction, the article notes that in three worldwide flu epidemics during the past century, around 50 million people died. It then continues: “Today, virologists fear a remake is underway in East Asia. Over the past month, a strain of bird flu that has killed thousands of chickens in four countries has broken through the ‘species barrier’ to claim a few human victims.”
With Americans already worried about fending off a new strain of human influenza this year, such an article could certainly be disconcerting. And against the backdrop of such publicity, avian flu was then discovered in poultry in Delaware and Texas.
USDA, while stressing the contagious nature – among birds – of the disease, said that transmission to humans would likely occur only under “unusual circumstances.” Dr. Nancy Cox, chief of the influenza branch of the Centers for Disease Control, said the ability of avian flu to jump to humans “appears to be very limited.”
April 2004 Render