June 5, 2007

Trade agreements could boost US pork industry

When it comes to US trade policy, it has seemed more difficult to gain bipartisan agreement among American policy-makers than to negotiate with foreign governments, according to Minnesota pork producer Brandon Schafer and a member of the executive board of the Minnesota Pork Producers Association.

Schaefer said four Free Trade Agreements (FTAs) negotiated by the Bush administration--with Colombia, Panama, Peru and South Korea - sat stalled in Congress over concerns about the lack of adequate labour and environmental standards in the pacts.

After weeks of negotiations between congressional leaders and the administration's trade-policy team, the deadlock was recently broken when House Speaker Nancy Pelosi and US Trade Representative Susan Schwab announced an agreement on new labour and environment provisions for these and future FTAs.

Schaefers said Minnesota pork producers and the whole pork industry as a whole fervently hope both political parties will unite behind their leaders and quickly approve the pending FTAs because these trade pacts will provide a much-needed boost to US pork exports.

According to Iowa State University economists Daniel Otto and John Lawrence, more pork trade, resulting from these pending agreements, would mean more jobs and more income.

For US pork producers, the economics of trade are simple, says Schaefer. Exports currently add US$33.60 to the price they receive for each pig. FTAs with South Korea and Latin American countries will collectively increase the value of exports to producers by an additional US$12.60 per head, according to Iowa State University economist Dermot Hayes. The trade agreements also would give US pork producers easy access to those countries' markets, while their competitors in Canada and the European Union would still face trade restrictions.

Schaefer said trade agreements benefits for the pork industry are borne out by the tremendous increases in pork exports to countries with which the United States has pacts. Since the US-Canada Free Trade Agreement went into effect in 1989, for example, US pork exports to Canada have increased by US$421 million, and since implementation in 1994 of the North American Free Trade Agreement with Mexico, pork exports to that country have increased by US$446 million.

To help sustain the jobs and other economic activity created by the Minnesota pork industry, particularly in the face of rising feed costs--the result of the rapid rise in corn-based ethanol production--the state's pork producers need more markets in which to sell their products.

Schaefer hopes members of Congress will follow their leaders and pass the pending FTAs that will truly benefit US pork producers.