WTO Talks Offer Hope for the Future

By Gregg Doud, NCBA Chief Economist

Editors note: The Sixth World Trade Organization (WTO) Ministerial Conference takes place in Hong Kong, Dec. 13-18.  NCBA’s Chief Economist Gregg Doud will attend the meetings.  Below, Doud offers his perspective on what these WTO negotiations mean for cattlemen.

Twenty-five years ago, the United States completed a transition to a globally-positioned, market-based economy. During the 1980s, it took the leadership of a visionary president who understood that future growth of the U.S. economy depends on our ability to produce and sell products competitively in a global marketplace.

In fact, many economists believe that President Ronald Reagan’s insistence on instigating a new round of global trade talks, the Uruguay Round, was a greater achievement than bringing down the Iron Curtain. This Uruguay Round was started in 1986 by the General Agreement on Tariffs and Trade (GATT). After eight years of negotiations, this body, now with 148 member countries, became known as the World Trade Organization (WTO).

WTO members are nations that negotiate agreements and resolve disputes under approved frameworks.  The WTO’s purpose is to help its members achieve lower trade barriers and establish and observe international trade rules. 

The WTO Web site states:  “The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.”

Why Trade?

U.S. beef producers should understand what Reagan worked to achieve in regard to trade.  The future ability to grow our business depends on the ability to market our product to the 96 percent of the world’s population who live outside the United States. U.S. grain-fed beef has a unique place in the global food economy and U.S. beef 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.

Why WTO?

The goal of U.S. agricultural trade policy should be to make our product as competitive as possible in the world market.  Increased market access via tariff reduction is the core mechanism by which U.S. beef producers can better their position in the global marketplace. Cattlemen’s profitability increases when we’re able to sell our beef to more people around the world while paying the least amount in tariffs.  Ultimately, for our industry, this depends on the percentages of tariff reductions in an agreement, as U.S. beef producers receive no domestic supports or export subsidies.

NCBA believes the WTO is the only mechanism capable of generating the political force necessary to move the agricultural trade liberalization process forward. Without forceful U.S. leadership in this multilateral context, U.S. beef producers will suffer under the trade distorting forces of mercantilism and protectionism.

Forward-thinking leaders around the world are embracing the opportunities trade liberalization offers their countries and will continue to do so regardless of future U.S. participation.  NCBA will continue efforts to market high-quality U.S. beef on an international level and will support continued movement toward reduced tariffs and expanded tariff rate quotas through WTO negotiations and signed agreements.  NCBA will strive for real and additional market access opportunities for U.S. beef exports, the elimination of export subsidies and a substantial reduction in production subsidies in multilateral agreements through the WTO.  Now is not the time to turn back and embrace a failed economic model, particularly at a time when historic opportunity is knocking at the door.