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March 2010 Archive for The Truth about Trade

RSS By: Dean Kleckner, AgWeb.com

Dean is Chairman Emeritus of 'Truth About Trade & Technology, a nonprofit advocacy group led by a volunteer board of American farmers.

Doha Is Dead

Mar 26, 2010
www.truthabouttrade.org

Is Doha dead?

I believe it is. There. I’ve said it.

Let me assure you that I take no pleasure in this. I wish it wasn’t true. But it’s time to stop fooling ourselves. The current round of World Trade Organization talks is as dead as a doornail.

It’s defeated, destroyed, and defunct. And now it has become something even worse. It’s a distraction.

On March 22, trade ministers began a “stock-taking exercise” in Geneva. What? You didn’t hear about it? Of course not: It was just another meaningless gyration in a negotiation that won’t ever end except in failure.

We should stop the charade. The United States must take the lead and work to improve the flow of goods and services across borders--not participate in empty diplomatic rituals simply for the sake of keeping up appearances.

Make no mistake: I would love for the Doha round to succeed. I’ve spent years advocating it. I’ve tried to nudge it forward at meetings around the world. I agree with the Copenhagen Consensus, a panel of economists that includes five Nobel laureates. They believe that Doha has the potential to increase global wealth by $3 trillion per year, with four-fifths of this sum going to people in developing countries, who have the most to gain.

Yet Doha is as dead as the dodo. We should stop deluding ourselves. In the future, trade barriers will fall not through massive multilateral negotiations, but in regional and bilateral agreements. The sooner Americans grasp this reality, the better off we’ll be.

The Doha round is named for the city in Qatar where talks began in 2001. That’s when observers say it “launched.” Well, Doha failed to achieve orbit. No other round has dragged on for this long. Like a rocket that didn’t fire properly, Doha has come crashing down to earth.

I’m not interested in searching through the wreckage, at least not now. As with Agatha Christie’s “Murder on the Orient Express,” there’s no single villain in this drama. Industrialized nations have too many trade-distorting subsidies, including in agriculture. Developing nations aren’t sufficiently willing to open their markets to foreign competition or to protect intellectual property rights. Nobody seems to appreciate the most basic rule of trade talks: To get something, you must give up something.

Politicians still pay lip service to Doha. President Obama mentioned its importance in his State of the Union address in January. At the G-20 conference in Pittsburgh last September, world leaders told their trade ministers to wrap up the Doha talks by December of this year.

These words are the rhetorical equivalent of “Weekend at Bernie’s,” the movie about a couple of guys who drag around their boss’s corpse in order to trick others into thinking that he’s still alive. Public officials seem to think that if they mention Doha enough times in their speeches, the rest of us will believe that there’s still some life remaining.

Yet the rigor mortis has set in. Here in the United States, it’s obvious to anyone who is paying attention. Obama says he wants to double exports in five years and negotiate a Trans-Pacific Partnership. These are worthy objectives, but he won't even push much smaller but already negotiated trade pacts with Colombia, Panama and South Korea through Congress. But let's be honest, the problem is bipartisan. Both sides of the aisle lack political will. The nominations of Michael Punke as U.S. ambassador to the WTO and Islam A. Siddiqui as chief agricultural negotiator (two good people) are languishing, even though both men won unanimous backing from the Senate Finance Committee.

Critics will say that the United States can’t possibly back out of Doha because doing so would represent an abdication of American leadership. Alas, there would be some truth to this claim. Yet nobody is leading the way on Doha right now. The talks sputter on without purpose--or genuine hope of success.

There may be another way of looking at the situation. By simply acknowledging what has happened, the United States could lead the world into new discussions.

Doha may be dead, but the case for Doha is not! It's time to move on.

Dean Kleckner, an Iowa farmer, chairs Truth About Trade & Technology. www.truthabouttrade.org Mr. Kleckner was the only farmer on the U.S. advisory team to the GATT negotiations when they began in September 1986 in Uruguay. Kleckner served on the U.S. Trade Advisory Committee, first appointed by President Reagan, reappointed by President Bush, and reappointed twice by President Clinton.

Playing by the trade rules

Mar 19, 2010
 

By Terry Wanzek - Jamestown, North Dakota

In his speech at the Export-Import Bank’s annual conference last week, President Obama demanded that America’s trade partners live up to their international obligations. “Other countries have to play fair,” he said. “American companies [must] have free and fair access to those markets. And that begins by enforcing trade agreements we already have on the books.”

True enough. But before pointing a finger of blame at the tariff policies of other nations, perhaps the president should take a closer look at practices here in the United States. They’re hurting the exports that Obama says he wants to expand.

On March 8, Brazil announced plans to raise duties on American products worth $591 million. The World Trade Organization has approved this measure as a legal retaliation against trade-distorting subsidies to U.S. cotton farmers. The proposed tariffs affect more than 100 types of goods, including autos, bar-code readers, and sugar-free chewing gum.

The single most valuable item on the list is wheat, which I grow for a living. The current tariff of 10 percent will jump to 30 percent.

So instead of moving forward on exports, we’re falling behind.

This almost certainly will affect my bottom line. I never know exactly where the wheat from my own farm winds up, but about half of all U.S. wheat is exported to other countries. The North Dakota Wheat Commission and US Wheat Associates list Brazil as one of the top three wheat importing countries in the world. US wheat's market share in Brazil has been as high as 12%. If we could achieve a 20% share it would mean a $260 million economic gain for the US wheat industry and rural America.

During his State of the Union address, the president announced the ambitious goal of doubling U.S. exports over the next five years. This week, he provided the details of his National Export Initiative. It includes the establishment of an Export Promotion Cabinet and efforts to boost financing, advocacy, and assistance to American businesses that seek to tap foreign markets.

Yet the president said nothing about the emerging trade war with Brazil--even though it is entirely within the power of the United States to resolve. Washington simply must do the thing that Obama is now asking of other countries: abide by its international trade agreements.

Brazil isn’t a special case, but rather the latest example in a disturbing trend. Last month, China proposed new duties of up to 106 percent on imports of American poultry. This is widely viewed as a response to a tariff that the Obama administration slapped on Chinese tires last year.

Far worse is an ongoing dispute with Mexico. Under the rules of the North American Free Trade Agreement, our government must let Mexican long-haul truckers have access to U.S. highways. Congress, however, has repeatedly blocked them. As a result, Mexico has imposed $2.4 billion in tariffs on U.S. agricultural and manufactured goods.

If Washington merely would keep its own promises, Mexico would eliminate these barriers to American goods and services. Exports would increase immediately.

President Obama has come a long way on trade. As a presidential candidate, he threatened to quit NAFTA. He talked of “a potential opt out” and promised to “renegotiate” this pact with our two most important trade partners. Since becoming president, he has spoken more favorably--but always cautiously--about free trade.

In his State of the Union address, however, he delivered a strong endorsement of trade as a job-creating tool of economic growth. He called for the passage of long-stalled trade agreements with Columbia, Panama, and South Korea as well as the successful completion of the WTO’s Doha round.

These are worthy and achievable objectives--each one an important advancement that will improve the economy and also help the president realize his goal of doubling exports. But in trying to create new opportunities, the president shouldn’t neglect the existing ones.

The United States will go to bat for our businesses and our workers,” he said on Thursday.

As baseball fans know, batters start at home.

Terry Wanzek, a board member of Truth About Trade and Technology, is a wheat, corn and soybean farmer and state senator in North Dakota. www.truthabouttrade.org

Cooperating To Feed America and the World

Mar 11, 2010
By John Reifsteck: Champaign, IL

www.truthabouttrade.org


The next time you’re at a grocery store, let the cashier ring up the sale. Then try to bargain for a better deal. Sounds ridiculous, doesn’t it? After all, just a handful of retailers sell over half of all the groceries in the United States, and an individual shopper has very little power to negotiate.

That same imbalance of power is a real problem for farmers and ranchers in the United States. Farmers are proud of their independence, but millions of growers bartering separately put them at a real disadvantage in the marketplace. That is why they banded together to form farmer owned cooperatives.

The premise of a cooperative is simple- it is a democratically controlled business that is operated to benefit those that use its services. Farmer cooperatives were first organized in the United States in the early 1800s, and really flourished later in that century as a response to the lack of competitive markets for farmers. Too often farmers were taken advantage of by merchants, and cooperatives offered them an alternative place to buy inputs and sell the production from their farms.

In 1890 the Sherman Antitrust Act was passed as a result of the anti-competitive activities of many of the large companies that dominated the United States economy. The act had the unintended consequence of possibly making the activities of some farmer owned cooperatives illegal. In response, the U.S. Congress passed the Capper-Volstead Act of 1922. Capper-Volstead gave farmers a limited ability to band together to process and market products. Senator Capper was quoted as saying that the bill is designed "to give to the farmer the same right to bargain collectively that is already enjoyed by corporations."

Cooperatives started small to solve local problems - perhaps to help farmers purchase petroleum in bulk, or to construct a processing facility that would not be economical for a single grower to build. Over time the variety of goods and services provided by cooperatives grew, and today many of the best known brands in the United States are products of farmer owned cooperatives. The cooperatives that served our fathers and grandfathers were good, but they could not meet the needs of today’s farmers. As agriculture has changed and grown, so have their cooperatives.

Cooperatives have to be run as businesses, but there are differences. If you listened to the discussion in a cooperative board meeting you would hear many of the same financial terms that would be used in a corporate meeting, but used in a different context. Profit and return on investment are important, but just as relevant is the service cooperatives provide to its members. Income is distributed to the users, or is invested for the future of the co-op.

Farmers aren’t the only beneficiaries. In many small towns, cooperatives are the largest employers, the biggest taxpayers, and even social centers.

There is no question that farmers have a unique partnership with their cooperatives. That is why it is disconcerting to see the Department of Justice questioning the relevance of the Capper-Volstead Act.

When Americans are struggling to keep their jobs and pay their bills, it makes no sense to target areas of the U.S. economy that continue to work well for both producers and consumers. Today, roughly 3,000 farmer cooperatives employ more than 180,000 people. They supply much of America’s food. And they help every sector of the industry, from big-time growers to small organic farmers who need to band together to survive.

With cooperatives possibly under attack from Washington, the people who understand and appreciate their value must rally around them. Throughout 2010, the Department of Justice (DOJ) and the Department of Agriculture are holding joint workshops on competition in the farm industry. A meeting in Iowa this month will focus on seeds. Future meetings will take place in Alabama (on poultry), Wisconsin (dairy), Colorado (livestock), and Washington, D.C. (consumer prices).

Cooperatives demonstrate the principle of strength in numbers. Saving them from this new threat, however, will require the efforts of individuals. Farmers and ranchers must turn out at these meetings and make sure their voices are heard.

For generations, farmers and ranchers have benefited from cooperatives--and so have all Americans, who enjoy more food security than anybody else in the world. How would agriculture and rural communities fare without cooperatives? And if they vanished, what would replace them?

John Reifsteck is a corn and soybean producer in western Champaign County Illinois. He serves as Vice-Chairman of the GROWMARK Board of Directors – a farm supply and marketing cooperative – and is a Board Member of Truth About Trade & Technology. www.truthabouttrade.org

*This commentary also appears in the Opinion section of the Friday, March 12, 2010 edition of the Washington Times (click here to view).

A Smallholder Farmer's Quest: Produce More Food For More People

Mar 07, 2010

By Gilbert Arap Bor: Kapseret, Kenya

www.truthabouttrade.org

More farmers are growing more GM crops than ever before. Most are like me: smallholders in developing countries. My dream is to join their ranks as soon as possible.

Last year, 14 million farmers worldwide planted 330 million acres (134 million hectares) of biotech crops. That’s an increase of 5 percent and 7 percent, respectively. These achievements set new records in both categories, according to a new report from the International Service for the Acquisition of Agri-Biotech Applications (ISAAA).

Unfortunately, my country of Kenya is not home to any of these farmers or acres. This will have to change if we’re going to achieve food security. We’ll need access to the best agricultural technologies available. So will farmers in the rest of Africa as well as across the developing world.

The benefits of biotechnology are obvious: GM crops enable farmers to spend less and produce more. That means more food for more people--and it gives Kenya a fighting chance in its quest to eradicate extreme hunger, a curse that afflicts far too many of my fellow citizens. In 2009 alone, at least 10 million Kenyans faced famine on account of drought instigated food shortages.

Farmers in 25 countries now grow biotech crops. The vast majority are just like me: small-scale growers well removed from the industrial world. Agricultural biotechnology may be associated with wealthy nations such as the United States, where its use is near-universal for cotton, corn, and soybeans. Yet about 90 percent of the farmers who take advantage of genetic improvement work on small plots of land in poor countries.

My own farm is 25 acres, in a district that is Kenya’s leading producer of grain. I used to grow about ten acres of corn, but three or four years ago I scaled back because of declining yields due to pests, a lack of rain, and the rising cost of inputs such as fertilizer, herbicide, and insecticide.

Biotechnology would help on each of these fronts. GM crops require very little land tillage, demand less herbicide and insecticide, and have a higher nitrogen uptake. This represents a considerable savings in cost for farmers, which helps rural economies. Bt has great potential to contribute to welfare growth in developing countries, as farmers are also able to pass on lower prices to consumers.

That’s why so many farmers have adopted biotechnology. Kenya may not have GM crops yet, but the global acreage of GM plantings in 2009 would cover my country more than two times over.

The good news is that ISAAA believes biotechnology will continue to spread. In Sub-Saharan Africa, only Burkina Faso and South Africa have welcomed biotechnology. Yet Kenya, Malawi, Mali, and Uganda may join the Gene Revolution soon.

I don’t see how it could be any other way. Growing populations, water shortages, and climate change will make it untenable for countries to turn their backs on biotechnology. There is a good deal of debate over the definition of agricultural “sustainability.” From my perspective, the word is meaningless if it doesn’t include the expansion of biotechnology.

Within five years, the ISAAA expects at least 20 million farmers in 40 countries to grow close to half a billion acres of biotech crops. It projects significant expansion of biotech cotton, corn, and soybeans in Brazil (which is already a major biotech user), commercialization of Bt cotton in Pakistan (which is not), and the acceptance of golden rice in China, India, Bangladesh, and the Philippines.

Then there’s the next generation of crops, which promise even greater benefits. These will include the ability to fend off additional diseases, flood resistance, improved nitrogen efficiency, and nutritional enhancements. What’s more, biotechnology can help battle drought, which has battered Kenya and exacerbated food shortages for three years in a row.

Despite the incredible promise of biotechnology, we cannot take its acceptance for granted. In Europe, activists have forced agriculture to retreat from its future. Germany once planted biotech crops--not many, but some. Last year, its farmers planted none. Across Europe as a whole, in fact, biotech cultivation was down about 10 percent.

Well-fed Europeans can survive without the benefits of biotechnology, at least for now. The rest of us, however, don’t enjoy the same luxury. Poverty and hunger are real problems--and biotechnology presents a pragmatic solution. I hope the day soon comes when we can use it in Kenya.

Gilbert Arap Bor grows maize, vegetables and dairy cows on a small-scale farm of 25 acres in Kapseret, near Eldoret, Kenya. Mr. Bor is a member of the Truth About Trade & Technology Global Farmer Network. www.truthabouttrade.org
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