Agricultural Trade Playing Field Must be Leveled
The productivity of the U.S. farmer is the highest of any country in the world. Agricultural trade is a shining star of U.S. exports, running a trade surplus every year since 1960 with an estimated $10.5 billion surplus in 2003. However, this surplus is declining, down from a $27.3 billion surplus in 1996 and a $12.3 billion surplus just last year. How can this be? One significant reason is that farmers simply do not face a level playing field when it comes to trade.
We live in an increasingly global marketplace. Agriculture is a key economic pillar not only for the United States, but also for our trading partners. The administration is looking to set the ground rules for these markets with a variety of bilateral and multilateral trade agreements.
Our farmers are grateful for these new markets. As U.S. agricultural efficiency increases, exports are essential. For example, we only need one out of every two bushels of wheat our farmers grow for domestic use. However, the barriers to our agricultural products are some of the toughest we face, and our farmers are forced to compete against other governments instead of other farmers. While the average U.S. tariff on agricultural imports is about 12 percent, in the rest of the world the average tariff exceeds 60 percent. More than half of our trade disputes are in the agriculture sector. The U.S. Agriculture Department’s Foreign Agricultural Service estimates that our agricultural exports are reduced by $4.7 billion annually due to unfair measures that deny or limit market access to U.S. products.
Too often, our farmers have upheld their part of the international bargain that trade requires only to find themselves shut out of the markets from which competing goods are pouring into the United States. We have faced just this problem with Canada. Although millions of bushels of Canadian wheat come into the United States every year, even the highest-quality U.S. wheat can enter into Canada only as low-priced feed wheat because of unfair regulations.
Our country’s wheat farmers have also had to take on the Canadian Wheat Board, a state trading enterprise with monopoly powers over the purchase and export of Canadian wheat. North Dakota’s farmers have long argued that the Canadian Wheat Board exercises its powers to engage in discriminatory and predatory practices, undercutting our farmers in the United States and other markets.
At their own significant expense, the North Dakota Wheat Commission initiated a “Section 301” trade action. Nearly a year and a half later, the U.S. trade representative concluded that the Canadian government grants the CWB special rights and privileges that hurt U.S. wheat farmers. Despite this ruling, the action against the CWB has yet to result in a tangible final remedy for U.S. farmers, though I am hopeful we will have such a decision later this year.
Our troubles with our neighbor to the north are but the tip of the iceberg. The United States is presently also in the midst of agriculture related trade disputes over both beef and beans with Mexico, and genetically modified foods with the European Union to name a few.
Section 301 of the Trade Act of 1974 is the principal means by which the U.S. addresses unfair foreign barriers to U.S. exports and enforces U.S. rights under trade agreements. Under the Section 301 process, the Office of the United States Trade Representative either self-initiates investigations of the trade practices of other countries when it deems necessary, or initiates an investigation as a result of a petition filed by an industry group with the USTR. Under Section 301, the USTR must first seek consultations with the foreign government under investigation. If this fails, and the investigation involves a trade agreement, the USTR must then proceed to use the dispute settlement procedures that are available under the trade agreement.
If the matter is still not resolved, the USTR must then determine whether the practices in question deny U.S. rights under a trade agreement or whether they are unjustifiable, unreasonable or discriminatory and burden or restrict U.S. commerce. If a trade agreement is found to be violated, the USTR must take action. Such actions may include suspending trade agreement concessions, imposing duties or import restrictions, imposing fees or restrictions on services, entering into agreements with the subject country to eliminate the offending practice, and/or restrict service sector authorizations.
It sounds complicated, and it is. Moreover, this process takes a great deal of time. Investigations of alleged violations of trade agreements need not be concluded 18 months after initiation. While this process is ongoing, our farmers suffer. They deserve better.
For this reason, I have joined Rep. Dave Camp (R-Mich.) and Sens. Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.) in introducing the U.S. Agricultural Products Market Access Act of 2003. This bill would create a “Special 301” trade enforcement procedure for agricultural products. “Special 301” is a derivative of Section 301, and is currently in place for the intellectual property sector. Special 301 for agriculture would require the USTR to identify in its annual report to Congress countries whose agricultural trade policies result in the greatest adverse impact on U.S. agricultural products. After identifying these priority countries, the USTR would be required, with limited exceptions, to initiate a streamlined Section 301 case to be concluded within six months. Because the USTR is statutorily required to proactively identify countries denying market access, the legislation acknowledges the need to increase staffing at the USTR.
This bill is just one of many steps that will be required to ensure fair access to agricultural export markets. Given the large agriculture trade surplus, it is essential that the interests of U.S. agriculture not be bargained away in future bilateral trade agreements. We must carefully scrutinize agreements with countries that are net exporters of like agricultural products. For example, Canadian wheat exports to the United States increased dramatically after the adoption of the Canada-U.S. Free Trade Agreement, whereas increases in U.S. wheat exports have been minimal and total U.S. exports of hard red spring wheat have declined. Notwithstanding this, the USTR has announced plans to complete a free trade agreement with Australia, another major wheat exporter.
We must also ensure that U.S. interests are protected as the WTO agricultural negotiations continue. This means an emphasis on the elimination of agricultural export subsidies and state trading enterprises as well as the reduction and harmonization of tariffs.
Fortunately, these are bipartisan and bicameral concerns. On July 24, Rep. Mike Simpson (R-Idaho), Sens. Byron Dorgan (D-N.D.) and Larry Craig (R-Idaho) and I sent out a “Dear Colleague” letter urging our colleagues to join the Trade Caucus for Farmers and Ranchers. This caucus was formed three years ago and had more than 40 members during the 107th Congress. This working group will seek to make sure that the interests of U.S. farmers and ranchers are made a priority during trade negotiations by meeting with top U.S. and national agricultural officials, including USTR Ambassador Robert Zoellick and USDA Secretary Ann Veneman, and providing briefings and updates on trade issues of interest to the caucus.
Our family farmers and those in rural America are depending on us to ensure fair trade. Let’s not let them down.
Rep. Earl Pomeroy (D-N.D.) is a member of the Agriculture Committee.