A New
Era of Global Economic Growth
The U.S. has to Get Back in the Game
History frequently records the greatness
of a civilization by the extent of its influence in foreign markets. For more than a
thousand years before the time of Marco Polo, trade agreements between and among nations
were a matter of necessity, and as the world evolved, a measure of pride and wealth.
Today, people who dismiss the importance of trade fail to appreciate the past.
For U.S. soybean producers, trade
agreements are a critical component of profitability.
Since November 1997, the American Soybean
Association (ASA) has held passage of trade negotiating authority at the top of its policy
agenda. At that time, ASA First Vice President Mike Yost, a soybean producer from Murdock,
Minnesota, said, "Farmers have to realize that over 100 new trade agreements have
been negotiated worldwide in the last two or three years and the United States hasn’t
participated in any of them, shutting out U.S. soybean producers from potentially
lucrative markets."
This year, with the help of Congress, President George W.
Bush pressed an activist strategy to regain momentum on trade. As he explained, "Our
goal is to ignite a new era of global economic growth through a world trading system that
is dramatically more open and more free."
Now, with recent passage of the 2002 Trade Act, the
United States has the opportunity to improve jobs, incomes, productivity, purchasing
choices, and family budgets of America's workers, farmers, small business persons, and
entrepreneurs.
Trade liberalization has
to be promoted on multiple fronts—globally, regionally, and with individual nations.
This strategy creates a competition in liberalization with the United States as the
central driving force. It enhances America's leadership by strengthening its economic
ties, leverage, and influence around the world.
Steve Censky, CEO for the American
Soybean Association, says, "Americans need not fear expanded free trade. The WTO
Agreements do not and will not preclude the United States from establishing and
maintaining its own laws, impair the effective enforcement of U.S. laws, including laws to
combat unfair imports, or limit the ability of the U.S. to set environmental, labor,
health, and safety standards at the level the United States considers appropriate."
Representing the Trade Interests of
the U.S.
The goal of American trade policy is to
create growth and raise living standards by opening markets abroad and maintaining an
open-market policy at home. In the United States, it is the responsibility of the U.S.
Trade Representative to promote the rule of law and defend the rights of U.S. workers,
farmers and businesses, and create worldwide opportunities for economic development and
technological progress. USTR represents the United States at the World Trade Organization,
in regional trade discussions in various parts of the world, and with all major trading
partners.
In May, United States Trade
Representative Robert B. Zoellick said, "Today we are delighted that the Senate
joined the House of Representatives in passing a Trade Promotion Authority bill that
affirms and advances the President's initiative to open markets. Open trade is at the
foundation of President Bush's strategy to advance hope, opportunities, prosperity, and
the rule of law to benefit Americans and others around the world."
USTR provides trade policy leadership and
negotiating expertise in its major areas of responsibility, including all matters within
the World Trade Organization (WTO), trade, commodity, and direct investment matters
managed by international institutions, such as the Organization for Economic Cooperation
and Development (OECD) and the United Nations Conference on Trade and Development
(UNCTAD).
USTR’s role includes expansion of
market access for American goods and services, industrial and services trade policy,
international commodity agreements and policy, bilateral and multilateral trade and
investment issues, trade-related intellectual property protection issues, and negotiations
affecting U.S. import policies. The agency also has administrative responsibility for the
Generalized System of Preferences (GSP) and Section 301 complaints against foreign unfair
trade practices, as well as Section 1377, Section 337 and import relief cases under
Section 201.
Soybean producers are well represented at
USTR. The Chief Agricultural Negotiator, Ambassador Allen Johnson, was formerly the
President of the National Oilseed Processors Association (NOPA), and at one time,
Executive Director of the Iowa Soybean Association. Johnson spoke to soybean producer
leaders last March about various trade issues and policies of the Bush Administration,
emphasizing the importance of Trade Promotion Authority and China’s compromise with
the United States regarding the acceptance of U.S. biotech-enhanced soybeans and other
biotech crops.
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| The U.S. Chief Agricultural Negotiator, Ambassador Allen
F. Johnson, was a special guest speaker at the American Soybean Association’s March
2002 Board of Directors meeting in Washington, D.C. Holding these offices at the time this
photograph was taken (L to R) are ASA Chairman Tony Anderson, ASA President Bart Ruth,
Ambassador Johnson and ASA First Vice President Dwain Ford. (ASA photo by Bob Callanan) |
Exports Vital to U.S.
Agriculture and Food Products
Agriculture depends heavily on trade.
American farmers sell overseas more than one-third of everything they produce. As
agricultural production continues to increase, producers increasingly rely on the global
market to expand sales. A rules-based international trading system is vital to the
prosperity of the American agriculture and food sector.
ASA President Dwain Ford says, "Only
through international trade can the United States continue to expand into markets abroad
and provide consumers globally with a more reliable, diverse, safe and affordable food
supply."
But the United States is falling behind
its trading partners and must do more to catch up.
The European Union now has 29 regional
and bilateral free trade or special customs agreements, 22 of which it negotiated in the
past decade, and is in the process of negotiating with 12 more countries. Mexico sped past
the United States after the North American Free Trade Agreement (NAFTA) to complete eight
free trade agreements with 28 countries. Japan has completed a free trade agreement with
Singapore and is exploring options with the Association of Southeast Asian Nations (ASEAN)
countries, Canada, Mexico, Korea, and Chile. Even China, just into the WTO, is pursuing a
Free Trade Agreement (FTA) with the ASEAN countries.
Altogether, there are 130 regional free
trade and customs agreements in the world; the United States is a party to only three.
There are 30 free trade agreements in the Western Hemisphere; the United States is a party
to only one. In recent years, when the rules of trade have been set, the United States has
frequently not been at the negotiating table.
The United States Department of
Agriculture (USDA) recently reduced its projection for total U.S. agricultural exports to
$53 billion. That’s down from $60 billion in 1996, a decline of more than 10 percent
in only six years time.
More than 30 percent of domestic
production of several primary agricultural commodities is exported, whereas barely 6
percent of total output for the entire U.S. economy goes to export markets. Producers of
bulk commodities—such as wheat, corn, soybeans, rice and tobacco—typically
export between 20 percent and 50 percent of their production to overseas markets. As U.S
agriculture productivity increases at a faster rate than domestic demand for agricultural
products, the United States must continue to develop new overseas markets for its farm
products.
Exports of high-value products, such as
processed foods and intermediary products, have outpaced domestic sales exponentially for
the last 15 years. Liberalization of trade barriers facing the food sector benefits
consumers both in the United States and abroad. In particular, consumers benefit from
enhanced variety, increased selection of foreign foods, and lower prices that result from
increased competition.
According to Mark Schmidt, soybean
product manager for Syngenta Seeds, "We see free trade opportunities as a critical
piece in improving the bottom line for America's soybean growers. Providing sponsorship to
ASA's Trade Opportunities Program is an important way we can support a stronger
agricultural economy."
Agricultural Exports Generate Non-Farm
Jobs
Agricultural exports support
approximately 750,000 American jobs, which pay higher than average wages and are
distributed among a wide range of communities and professions. One third of these jobs are
located in rural areas, many of which depend heavily on agriculture and related industries
for employment and economic growth. In fact, no other industry contributes a greater share
of export benefits to rural America.
Urban and suburban communities benefit
from agricultural trade as well. In 1998, agricultural exports supported 538,000 urban and
suburban jobs, most of which were considered "off-the-farm" jobs.
Agricultural trade liberalization
provides direct and indirect benefits to U.S. non-agricultural industries. The U.S. food
and agricultural sector draws heavily from non-agriculture sectors for intermediate
inputs, particularly chemicals, equipment, machinery and services. Many businesses provide
materials and services used by farmers and processors, such as fertilizers, machinery
parts and equipment and other services. As trade expands business for American farmers, it
expands business for related suppliers as well.
Leveling the Competitive Playing Field
The Uruguay Round of trade talks, which
concluded in 1994, opened a new chapter in agriculture trade policy, committing countries
around the world to new rules and specific reductions in protection and support that
constituted barriers to trade. Agriculture finally became a full partner in the
multilateral trading system.
For the first time, countries had to make
across-the-board cuts in agricultural tariffs. Export subsidies also had to be reduced,
and internal support policies that distort trade were reduced and capped. Finally,
countries agreed to a new set of science-based rules for measures that restrict imports on
the basis of human, animal or plant health and safety.
But there is still much more to be done
to fully liberalize food and agricultural products trade. For example, while the average
U.S. tariff on agricultural products is approximately 8 percent, the worldwide average
tariff is more than 40 percent. Agriculture is one of America’s most competitive
sectors, but in order to serve consumers worldwide, the United States must continue to
level the playing field and implement effective rules on international trade.
Since 96 percent of the world’s
population and nearly four-fifths of the world economy are outside of U.S. borders,
increased access to international markets is critical to the future growth and prosperity
of the U.S. agricultural economy.
Trade Promotion Authority is a vital
first step toward a new round of trade negotiations that will provide new market access,
further reduced tariffs and dismantling other barriers to trade. As the world’s most
competitive producer and largest exporter of agricultural products, the United States can
only prosper economically when other markets are accessible.
ASA’s
Position on Trade and WTO
Fully 50 percent of every U.S. soybean
crop is exported as whole soybeans, as protein meal and vegetable oil, or in the form of
poultry and pork products. As world food needs double over the next 30 years, U.S. soybean
producers are prepared to supply this increased demand—provided they have access to
these growing markets.
Past trade agreements have been good for
the U.S. soybean industry. Under NAFTA, sales of U.S. soybeans and soybean products soared
from $474 million in 1993 to $869 million in 1996—an increase of 83 percent. And
since that time, Mexico has become the fourth largest buyer of U.S. soybeans. Expanding
NAFTA offers potential for U.S. producers to tap other markets in Latin America.
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ASA has been promoting exports of U.S. soybeans since
1956, and is now celebrating its 20th anniversary of market development work in
China. Here at the port of Dalian in Northeastern China, the ship Top Beauty is unloading
55,000 tons of U.S. soybeans. (ASA photo by Bob Callanan) |
For ASA, the Uruguay Round
did not go far enough in liberalizing trade in the oilseed sector. Among the deficiencies,
U.S. competitors are still allowed to indirectly subsidize vegetable oil and soybean meal
exports, and import tariffs in countries with major market potential have not been
adequately reduced.
ASA supports complete elimination of all
export incentives and import tariffs to create a global level playing field for oilseed
trade.
The WTO Agreements provide for a
one-third reduction of foreign tariffs on manufactured products. Tariffs are now at their
lowest levels in history. WTO rules limit the ability of foreign governments to restrict
agricultural trade through tariffs, quotas, subsidies, and a variety of other policies and
regulations, which has greatly expanded export opportunities for U.S. agricultural
products.
| TOP
Video Presentation Learn More About the
Importance of Trade Liberalization and ASA’s work to promote trade liberalization
policies that will benefit U.S. soybean farmer profitability. Access the following
RealPlayer media presentation. |
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| Select one of
the about options based on the speed at which you connect to the Internet, either "Dial-up" or "Broadband" |
| This presentation is also available to ASA
members on CD-ROM, while supplies last. See the e-mail request form online or call
ASA’s Trade Opportunities Program (TOP) Manager Cherie
Lawrence at 800/688-7692. Join ASA now
and receive a free CD-ROM. |
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WTO Works for America
The United States was a leading force in
establishing the World Trade Organization (WTO) in 1995. The WTO is an international
institution in which the United States can negotiate agreements to reduce barriers to
trade with 134 other WTO members, allowing American businesses, farmers and working people
to find new opportunities, create new jobs, and raise family living standards.
The WTO is also a forum for countries to
enforce trade agreements and continue negotiations toward expanding world trade
opportunities. Under WTO rules, foreign nations provide assurance of greater access to
their markets, and are constrained from giving their workers and firms unfair advantages
through subsidies and protectionist domestic policies. At the same time, WTO rules
recognize and respect governments’ right to maintain high standards for the
environment, labor, health, and safety.
The trade gains that the United States
has won through the WTO Agreements and other trade policies have been a major contributing
factor to a thriving economy. Studies estimate that the effect of full implementation of
the WTO Agreements will be to boost U.S. Gross Domestic Product (GDP) by $125-250 billion
per year (in 1998 dollars). The U.S. has a great stake in further expanding opportunities
for U.S. companies and workers in manufacturing, agriculture, and services industries
through the WTO.
Katherine Trent, Director of Shared
Solutions, the Agricultural Contributions Program of the Philip Morris Family of
Companies, states, "Since 96 percent of the world's population and nearly four-fifths
of the world economy are outside of U.S. borders, increased access to international
markets is critical to the future growth and prosperity of the U.S. agricultural
economy."
Trade Promotes U.S. Jobs
WTO rules lower trade barriers abroad and
help the U.S. export more goods and services to other countries. On average, every billion
dollars of goods and services exported results in thousands of jobs here at home.
Between 1994 and 1998, 1.3 million new
jobs supported by exports of goods and services have been created in the United States.
Over the same period, total U.S.
employment increased by 11.7 million jobs, and the unemployment rate declined from 6.1
percent to 4.5 percent. And jobs supported by goods exports pay 13-16 percent above the
average wage.
Today, industrial production in the
United States is over 34 percent higher than it was in 1992. This compares to a 3.5
percent increase in Germany and a 0.5 percent decline in Japan. Between 1992 and 1998,
manufacturing productivity was up nearly 4 percent per year, and manufacturing jobs
increased by over half a million.
Helped by WTO services rules, the United
States leads the world in trade in services with more than $264 billion in exports
annually. It is the fastest growing sector in the U.S. economy and provides the greatest
number of new jobs. The services sector, including retail, transport, construction,
insurance, finance, accounting, advertising, computer services, tourism, engineering, and
environmental services, accounts for more than 60 percent of the U.S. economy, and 80
percent of all jobs.
Trade Raises Living Standards for All
Americans
The creation of higher-paying jobs
supported by trade raises living standards for tens of thousands of American households.
Trade barriers, by making goods and services more expensive, cost consumers more money at
the store. In 1990, prior to the WTO, private sector studies estimated that trade
protection cost U.S. consumers approximately $70 billion per year.
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| American families in urban and rural areas both gain
from increased trade. From the kitchen of ASA Executive Committee member Neal Bredehoeft,
a soybean producer from Alma, Missouri, the benefits of exports may seem far away, but
their economic impact is felt throughout the community. (ASA photo by Jill Wagenblast) |
A commitment to open
markets has led to more affordable prices and a greater variety of the things that we
purchase everyday in the grocery shopping cart and for household goods, such as clothes,
autos, toys, and consumer electronics. The standard of living improves for all Americans,
but particularly for low-income families, since lower prices mean that your paycheck goes
further in the marketplace.
The WTO Agreements result in lower prices
for business and consumer products. By the time that the Agreements are fully implemented
in 2005, the annual effect will be equivalent to an increase of $1,500-$3,000 in
purchasing power for the average American family of four.
Trade Promotes Democratic Values
The WTO assists in advancing democratic
values. Countries that subscribe to WTO rules are obliged to follow the rule of law in
commercial transactions, with the result that WTO members’ policies are more
transparent and less arbitrary. Disputes are to be settled peaceably and efficiently under
WTO provisions.
Open markets and regulatory due process
also increase the freedom of individuals to reap the rewards of their labor, and to
maximize the economic benefit of their talents and creativity. WTO’s broad network of
trade agreements contributes to stability, prosperity, and principles of openness among
its members.
It is important to recognize that trade
liberalization can also yield direct benefits to the environment, health and safety. The
WTO’s Preamble establishes sustainable development as a fundamental objective of the
trading system, and encourages members to pursue such opportunities.
For example, by eliminating tariffs and
other barriers to trade in environmental goods and services such as clean coal technology,
waste-water treatment and pollution monitoring equipment, the task of providing people
with clean air, clean water, and improved public health is made easier.
By reducing trade barriers in efficient
energy technologies, nations can produce more power with less emission of greenhouse
gases, and by disciplining trade-distorting subsidies that can also harm the environment,
in areas such as fisheries, the world is moving toward sustainable management of natural
resources.
The Job Isn’t Finished
For all the benefits that have been
gained from the trading system over the past five decades, more remains to be done in
opening foreign markets to American goods and services, and expanding the sales and
payrolls of U.S. companies by addressing additional obstacles to trade in manufacturing,
agriculture, and services.
Trade barriers in other countries are
still higher than in the U.S., and these barriers amount to lost opportunities for
American workers and firms.
The United States must be a leader in
shaping the 21st century economy, and continue on the path toward prosperity,
jobs, growth, and higher living standards for Americans. Working through the WTO, the
United States can speed the economic and social progress the global economy creates, while
improving the lives of working people, protecting the environment and advancing the values
of freedom, fairness, open government, and rule of law that we all share.
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