The Importance of Free Trade and Export Markets

By Tom Cook, President, National Renderers Association

Partisan bickering continues in Washington, DC. The Republicans and Democrats are worlds apart on deciding a budget and taxes. It could get real interesting around August 1st when Congress will have to vote on the national debt limit. A lot of words are flying back and forth, but for now they seem to be just words. Both sides are drawing lines in the sand. Before a vote, someone will have to blink. However, one area where some bipartisan activity is occurring is in the area of trade.

There are currently three important free trade agreements (FTAs) pending between the United States and Columbia, Panama, and South Korea. The previous George W. Bush administration originally negotiated these FTAs but the then Democratic-led Congress was not willing to address them at the time. Since then, President Barack Obama’s administration has been slow to embrace the agreements. It wanted to do its own review and seek some changes so it was natural for the new administration to take time to do this. But it should not have taken over two years.

My guess is that the Obama administration first wanted to get past the mid-term elections and then figure out how to appease the labor unions. It’s not clear what was done to appease the unions, but the Obama administration is now moving on all three FTAs as it has indicated to Congress its willingness and need to accept and implement them.

Essentially all three agreements will significantly reduce the import tariffs of each country, provide more access for U.S. products, and offer benefits to agriculture. National Cattlemen’s Beef Association President Bill Donald recently testified before Congress that beef exports have added $145 per head advantage to cattle and these agreements will only increase that number.

These FTAs will benefit the rendering industry both directly and indirectly. It will probably take until at least sometime in 2012 for these agreements to get through Congress, but at least they are finally moving. Obama will be going against most of his own party in Congress; however, with his efforts and most of the Republicans, they should pass.

It has been made clear by the National Renderers Association (NRA) and many other livestock and poultry organizations that they agree with Donald, who further testified, “We can’t talk about trade agreements without discussing non-tariff trade barriers. International trade must be based on sound science, not political science. Abiding by internationally recognized science-based guidelines, like those set by the World Organization for Animal Health, promote fair trade for the United States and developing countries.”

On this note, Canadian and U.S. government animal health officials are respectively having talks with Chinese government health officials to allow tallow into China. NRA hosted the Chinese delegation as they visited rendering plants and officials in Washington, DC. We are optimistic that this potentially large market will soon be open for North American tallow. Our respective negotiators are emphasizing sound science and internationally accepted practices as the Chinese officials deliberate.

Another logjam that seems to have broken with the Obama administration is the Mexican trucking dispute. For the past two years, the Mexican government has levied $2.6 billion of retaliatory tariffs on U.S. products because the United States has been in violation of trucking provisions agreed to by both nations under the North American Free Trade Agreement.

There was considerable support within the Obama administration to resolve this dispute for some time. However, it was clear that until recently the White House was listening to the labor unions and their vehement opposition to settle the dispute. It’s possible, in this case, White House officials decided to move on without union support.

I have written often of the U.S. Department of Agriculture’s (USDA’s) Foreign Market Development (FMD) program and Market Access Program (MAP), both of which have been very beneficial to the rendering industry for many years. They are export market development programs that build on a strong industry-government partnership. The FMD and MAP are distinct, separate programs that address different aspects of market development and promotion and are examples of some of the most successful public-private partnerships.

With Congress looking for ways to cut spending to reduce the deficit, these programs are under intense scrutiny. There are 100 new members of the 112th Congress and I doubt many of them had ever heard of these programs before they arrived in Washington, DC. Coalitions of organizations and industries, including the NRA, that benefit and utilize these programs are working aggressively to get the facts to every member of Congress as they deliberate their votes.

These programs are not boondoggles and deserve serious consideration for continued support. For instance, a recent study by IHS Global Insight, Inc., commissioned by the USDA and released last year, found that the increase in market development spending through FMD and MAP since 2002 substantially increased U.S. market share. The bottom line in the study was that for every additional one dollar expended by government and industry on market development during 2002-2009, U.S. food and agriculture exports increased by $35, a 35-to-1 return on investment.

These are cost-share programs. The NRA contributes in dollars or in-kind contributions to these programs. It is important that the industry be able to continue to have these programs available, and NRA is working to preserve them.

The NRA International Market Development Committee recently met in Toronto for a strategic planning meeting where it took the long view on trade for the rendering industry. If the attendance and enthusiasm at this meeting was any indication, trade is important and a high priority for the rendering industry.

From the Association – June 2011 RENDER | back