Date: 5/19/2011

Title: Let’s Move On Trade

by Bill Donald

As president of the National Cattlemen’s Beef Association (NCBA), I strongly encourage you to engage in discussions with your members of Congress urging the passage of pending free trade agreements with Korea, Colombia, and Panama. Each day that goes by without implementing these agreements is another day we risk losing American jobs by losing market share to other countries.

NCBA considers all three of the pending free trade agreements to be a top priority. With 96 percent of the world’s consumers living outside of the United States, future growth of the U.S. economy depends upon our ability to produce and sell products competitively in a global marketplace. Economic globalization is not simply a matter of ideological or political preference; it is a fundamental reality that will determine whether America remains an economic superpower or a secondary economic force.

The European Union (EU), Australia, Canada, Argentina and Brazil are all competing with the United States for access and market share of foreign markets. Further delay of these free trade agreements keeps outrageously high tariff rates in place that put American cattlemen at a competitive disadvantage. If other countries secure agreements that eliminate or reduce these tariff rates before we do, then we will no longer be able to export beef — we will have exported our jobs. If Australia successfully ratifies a similar bilateral trade agreement with South Korea before the United States, they would have a 2.67 percent tariff advantage over American beef for the next 15 years.

Korea is one of the largest export markets for American beef. The United States exported nearly $518 million of beef in 2010, which is a 140 percent increase in sales over 2009.
American beef exports to South Korea added $25 in value to each of the 26.7 million head of steers and heifers produced in the United States in 2010. Unfortunately, American beef faces a 40 percent tariff on all cuts, resulting in over $200 million in tariffs in 2010. NCBA strongly believes the 40 percent tariff is the greatest hindrance to U.S. beef exports to Korea. Implementation of the KORUS FTA would phase
out South Korea’s 40 percent tariff on beef imports, with $15 million in tariff benefits for beef in the first year of the agreement alone and about $325 million in tariff reductions annually once fully implemented. According to U.S. International Trade Commission, annual exports of U.S. beef could increase as much as $1.8 billion once the agreement is fully implemented. Eliminating the 40 percent tariff will give more Korean consumers greater access to safe, healthy U.S. beef at a more affordable price.

Colombia is an important market for U.S. beef and beef variety meat exports. Unfortunately, Colombia places up to an 80 percent tariff on U.S. beef imports, making it one of the highest tariffs U.S. beef faces anywhere in the world. This agreement immediately provides duty-free access for prime and choice U.S. beef and reduces tariffs on all other beef and beef products over 15 years. In addition to eliminating tariffs, the U.S.-Colombia Trade Promotion Agreement (CTPA) addresses non-tariff barriers by providing assurances for a stable export market through plant inspection equivalency. It also fully reopens the Colombian market to U.S. beef by assuring that Colombia adheres to the World Organization for Animal Health (OIE) guidelines related to bovine spongiform encephalopathy (BSE).

Another important lynchpin for U.S. beef trade is the Panama Free Trade Agreement. Like the CTPA, the Panama Free Trade Agreement provides assurances for a stable export market through plant inspection equivalency and Panama also modified its import requirements related to BSE to be consistent with international standards. Additionally, the 30-percent tariff on prime and choice cuts
would be immediately eliminated and the duties on all other cuts would be phased out over 15 years. If Congress approves these agreements, the United States will ultimately have free trade for U.S. beef with approximately two-thirds of the population in the Western Hemisphere.

President Obama has committed to the American to double U.S. exports and create jobs in rural America. We all agree that exports create jobs, and we have all worked hard in support of these agreements. We encourage President Obama to be a man not of words, but a man of action. All three pending free trade agreements need to go to Congress as soon as possible. We need all cattlemen to urge their members of Congress to continue advocating free and open trade. We need Congress to ratify these agreements the very second they are received from the President.