In the last issue of Render, I wrote about some of the changes with the Obama administration as compared to previous administrations. It is a given that things will change.
My first observation was the lack of commitment at the highest levels for enhancing trade. I was referring to the fact that free trade agreements (FTAs) with Columbia, South Korea, and Panama have been waiting for ratification since the Bush administration. Eighteen months into this administration, President Barack Obama has finally asked that the Korean FTA be ready to send to Congress by the time he visits South Korea this fall after the November elections. So what is there to do to get ready? I know it will require the Obama administration stamp of approval, but does President Obama think a lame duck Congress will pass something it would not pass before the election? There are already enough Democrats signed up to oppose any FTA so the president will need to rely on many Republicans to ratify any trade agreement.
Prospects of getting any of the FTAs approved by Congress are slim. To do so, President Obama will have to go against his own party and rely on Republicans to get it done, but it’s been done before. President Bill Clinton did just that in the early 1990s when he sought the approval of the North American Free Trade Agreement (NAFTA). Most of the Democrats opposed him, but with Republican support, NAFTA was approved. Interestingly, the person in the White House “war room” then directing the campaign was the current White House Chief of Staff, Rahm Emanuel.
These three current FTAs might not be perfect. They were negotiated by the previous administration, so you would expect this administration to review and tweak them more to their liking. But the principles are sound. They are symbolic as to where the United States should be with its trade policy and represent this country’s desire to increase trade opportunities with potential markets. Since U.S. import restrictions are some of the lowest in the world, most of the benefit of the FTAs is to reduce other countries’ trade barriers so the United States can gain more access to their markets.
While we wait to get these three FTAs approved, Canada and several other countries have already negotiated and ratified some agreements giving them a head start and competitive advantage over the United States.
The president pledged to double exports within the next five years – a wonderful goal and one that we should all strive to achieve. After attending a two-day meeting in mid-July listening to individuals from different government agencies try to explain the administration’s plan for the National Export Initiative (NEI), we still don’t know much yet. A goal of the NEI is to assist small- and medium-sized companies, which most of the NRA membership would fall under, with the exception of some packer-renderer members. Some very good people in government are working to come up with a plan. Many of them realize that government doesn’t do the selling, that the private sector does, so they are trying to find the tools to help the private sector do just that.
One tool that is working is the U.S. Department of Agriculture’s Market Access Program (MAP). This program originated in the 1985 farm bill under another name. It got off to a rocky start, but, in time, the criticisms and problems with it were addressed. There are about 80 agricultural organizations, such as the National Renderers Association (NRA), participating and benefitting from this program. MAP provides assistance to agricultural organizations so they can develop programs that help their members reach export markets. Economic studies have shown the MAP returns about $35 for every dollar spent.
MAP has been funded in recent years at $200 million annually. The irony is that the administration wants to cut this program by 20 percent. In the big picture of government budgets, $200 million is not a lot of money. Fortunately, for this coming year, Congress will ignore the administration’s request and fund the program at current levels. However, we expect the administration to continue to try to cut this program in future years.
NRA members participating in the recent Washington fly-in emphasized the importance and success of the MAP during their congressional visits. It is okay to look for new ideas and programs to promote exports, but administration officials must recognize the programs that are already working and support them.
As I stated before, the NEI is a worthy initiative with an ambitious goal. We should do what we can to participate and support it. However, I think we can do more to expand U.S. agriculture exports by addressing some of the policy issues such as the three FTAs and the Mexican trucking standoff.
Hopefully, the administration and Congress can do two things at once; export promotion and trade policy.
Convention Quickly Approaching
The 77th annual NRA convention is not far off – October 26-29, 2010. A very good program has been planned to provide the right mix of industry information and issues, education, entertainment, and socializing. I hope you are planning to attend. Convention program, registration, and lodging information is on the NRA Web site at http://nationalrenderers.org.
From the Association – August 2010 RENDER | back