May 20, 2004
US Cattle Industry Testifies Before Congress On Beef Trade Priorities
Kansas cattle producer and National Cattlemen's Beef Association (NCBA) President Jan Lyons is testifying before the U.S. House Committee on Agriculture today. The hearing was called for a review of agricultural trade negotiations. Lyons, along with three generations of family members, manages a ranch in the Flint Hills tallgrass prairie, south of Manhattan, Kan. She is testifying on behalf of cattle producers nationwide.
"I am privileged to represent over 26,000 individual members and over 250,000 members through our state and breed affiliates," says Lyons. "Today I would like to focus on why our industry believes that the WTO negotiations are so critical to the future growth of our industry and why trade is the key to all U.S. beef producers' future success."
In 2003, the average per pound value of U.S. beef exports was $1.66 while the average per pound value of our imports was $1.21. Overall, the U.S. enjoyed a record $2.2 billion beef and beef product trade surplus last year. Such success in the export market is nearly unprecedented in any agriculture commodity when considering that the U.S. beef industry also experienced record domestic prices in 2003.
"As a result of a single case of Bovine Spongiform Encephalopathy (BSE) on December 23, 2003, U.S. beef producers now have a greater appreciation of the value of our export markets," says Lyons. "Earlier this month, the entire industry returned to a point of profitability for the first time since December 23rd, yet it has been the tremendous resilience of U.S. consumer confidence and demand that has seen us through this crisis in our industry."
NCBA strongly supports trade initiatives that reduce barriers to access for U.S. beef. Trade liberalization has been key to economic growth for centuries. NCBA's members believe that the greatest trade liberalizing benefits to our industry can be obtained via the multilateral World Trade Organization (WTO) negotiating process rather than a string of bilateral agreements.
"Our assessment of how well negotiations are going depends on the ability to reduce extreme tariffs on beef imports to Japan and South Korea," says Lyons. "Since we do not believe bilateral agreements will be launched with these countries in the near future, the WTO is the only way to generate the political force necessary to move the process forward. Without forceful U.S. leadership in this multilateral context, U.S. beef producers will undoubtedly suffer under the market distorting forces of mercantilism and protectionism.
"Increased market access via tariff reduction is the core mechanism by which U.S. beef producers can better their position in the global marketplace," says Lyons. "Unfortunately, we are not yet far enough along in the negotiating process to really evaluate where we stand. Ultimately, for our industry, it depends upon the percentages of tariff reductions. U.S. beef producers receive no domestic supports nor export subsidies."
North American Free Trade Agreement (NAFTA) - For U.S. beef producers, NAFTA is a success story. Mexico's increase in disposable income has led directly to increased beef consumption in Mexico. From an inconsistent market prior to NAFTA, Mexico became our most significant market in terms of tonnage in 2002. We will continue to ask Congress to encourage a swift resolution to the anti-dumping case that has imposed illegal tariffs for four years.
U.S.-Chile FTA - This was a ground-breaking agreement that should serve as a starting point for future free trade agreements (FTA). Access issues, SPS/inspection equivalency, and grading requirements were addressed in the agreement in addition to herd health.
China - While currently shut to U.S. products due to the BSE situation, U.S. beef exports to China experienced significant growth from 2001 to 2002. This was in no small part due to China's WTO Accession agreement that put the tariff on beef at 12 percent.
Russia's WTO Accession Agreement - Russia is the largest importer of U.S. beef liver and it is critical that we re-open this market for U.S. beef exports as soon as possible. Russia is one of the fastest growing markets for beef variety meats in the world and the tariff rate quota (TRQ) on fresh/chilled and frozen beef is certainly large enough to provide for substantial growth in U.S. market share. We are pleased with Russia's WTO accession package."
NCBA will only support bilateral or regional initiatives that are conducted on a parallel track with multilateral WTO negotiations and result in a net increase in U.S. beef exports. Both the Doha development agenda and the Free Trade Area of the Americas (FTAA) are slated to be concluded by 2005, therefore both negotiations are proceeding on a parallel track.
FTAA - An FTAA that does not address actions such as Brazil's currency devaluations and credit subsidies to agriculture is one that NCBA would oppose. In addition, any trade agreement needs to include a commitment to improve cooperation to eradicate foreign animal diseases. This is of particular importance due to the widespread occurrence of foot- and-mouth disease in South America.
U.S.- Australia FTA - NCBA's primary objective in these negotiations was to prevent any potential negative impact on U.S. beef producers caused by this free trade agreement before we would have an opportunity to increase market access via the WTO trade liberalization process."
U.S.- Central American Free Trade Agreement (CAFTA)/Dominican Republic FTA - One of the strongest aspects of the CAFTA agreement is the recognition of the fact that the vast majority of our exports are a premium grain-fed product that will not compete price-wise with Central American grass-fed beef. Current and future demand for this product in hotels and restaurants in this region is significant. Also significant is the eventual elimination of all tariffs on U.S. beef. The addition of the Dominican Republic to this agreement would provide increased opportunities in the country's growing tourism industry.
U.S.-Morocco FTA - U.S. beef producers are very supportive of the beef, sanitary/veterinary and tariff-rate quota provisions within the U.S.-Morocco FTA. This agreement will allow, for the first time, market access for "high-quality" (Prime & Choice) U.S. product and variety meats to enter the growing Moroccan tourism industry.
U.S.-Andean FTA - This region also presents interesting possibilities for U.S. beef producers. We look forward to gaining additional access, as opportunities exist for high-quality U.S. beef to supply the hotel and restaurant industry, as well as beef variety meats.
U.S.-Panama FTA - The demand created by Panama with its growing tourism industry has not been satisfied by current domestic production. There is an opportunity for high-quality U.S. beef to supply this demand.
U.S.-Thailand FTA - Thailand's current 80 percent tariff on all beef imports is a huge impediment toward beef consumption for this country of 64 million people. NCBA is excited about the opportunities this market presents, assuming that our negotiators are successful in obtaining an agreement that is similar in structure to the CAFTA.
"NCBA's top priority is reopening the remainder of our export markets, which are worth about $15/cwt in the price of a fed steer," says Lyons. "We have recovered about $5/cwt but we still have $10/cwt to go. We must also insist on complete harmonization of BSE regulations in North America to maintain credibility with our trading partners as we ask them to reestablish trade. We expect that every effort is being made to reopen them as soon as possible based upon sound science.
"High-quality U.S. beef has a unique place in the global food economy and U.S. producers know, as a result of our investments in technology and science-based animal health and inspection systems, that we produce the highest-quality, safest beef in the world," says Lyons. "The goal of U.S. agricultural trade policy should be to make our product as competitive as possible in the world market. The greatest opportunity for growth in our industry hinges on our ability to market our safe, wholesome high quality beef around the world."
