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February 2009 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.

Who Benefits From GM Crops?

Feb 20, 2009
As an Australian farmer, I find myself wondering if the professional protest group Friends of the Earth should consider renaming itself. I suggest “Foes of the Farmer.”
Recently, that organization released its annual assault on biotechnology in a report called “Who Benefits from GM Crops?” They attempted to portray farmers who plant genetically enhanced seeds as a bunch of corporate hayseeds who don’t know much about agriculture in general or their own businesses in particular.
That would be a lot of hayseeds--more than 13 million, according to the International Service for the Acquisition of Agri-Biotech Applications (ISAAA), which issued its 2008 report on the Global Status of GM crops last week.
The two new releases are a study in stark contrasts. Whereas “Foes of the Farmer” make thinly documented claims about the alleged failures of biotechnology, ISAAA focuses on the actual experiences of men and women who work the land. In 2008, we grew more biotech crops than ever before: more than 300 million acres (125 million hectares), an increase of more than 9 percent compared to a year earlier.
Why are so many farmers around the world taking up biotechnology so quickly? I believe it’s because the people who have the most direct stake in agricultural productivity think it’s a good idea. They have seen the difference crop biotechnology has made and understand that this is a wonderful technology for farmers and the environment.
Record-breaking years have become a routine for biotech crops. Since their commercialization in 1996, these plants have surged in popularity. Farmers now have grown an accumulated 2 billion acres of them, according to the ISAAA. That’s an incredible milestone. It took a decade for farmers to plant their first billion acres, but only three years to plant their second billion.
This remarkable development is possible because so many people benefit from GM crops. The benefits begin with farmers, who see their input costs decline and yields increase. That certainly has been my experience as a cotton grower in Australia. Since taking up biotechnology, we’ve reduced our pesticide applications by 85 percent. We also produce more fiber more reliably for every hectare of land and litre of water we devote to farming.
Consumers profit as well, even though they don’t always know it. At a time of financial turmoil around the world, these agricultural innovations are helping to keep food, feed and fiber bills in check. The ISAAA report says that in the United States, the economic gains associated with biotech crops since 1996 have been worth $44 billion. In 2007 alone, it was worth $10 billion. In the future, this figure will do nothing but increase.
Farmers appreciate all of these gains, which is why they’ve been so eager to take up GM crops. The vast majority--more than 90 percent or 12.3 million--are small, resource-poor farmers in places such as Burkina Faso, the Philippines, India and South Africa. They’re choosing to grow biotech cotton, and they’re making this choice because they’re witnessing the advantages of biotechnology firsthand.
India is home to about 5 million of these farmers. Because of biotechnology, their yields have gone up by 31 percent and insecticide applications have dropped by 39 percent. Many of these gains have led to an improved quality of life. “In contrast to the families of farmers planting conventional cotton,” says the ISAAA report, “families of Bt cotton farmers enjoyed emerging welfare benefits including more prenatal care and assistance with at-home births for women, plus a higher school enrollment of their children, a higher percentage of whom were vaccinated.”
One of the biggest early benefits that Australian farmers saw was being able to spend weekends and evenings with their families through the spraying season which was no more.
Biotech farmers now inhabit 25 nations, whose citizens make up more than half of the world’s population. The ISAAA labels 14 of these nations as “biotech mega-countries” because their farmers plant at least 50,000 hectares of GM crops (equivalent to more than 123,000 acres). The largest grower is the United States, which accounts for almost half of all biotech acreage. Next in order comes Argentina, followed by Brazil, India, and Canada. An additional 30 countries don’t grow GM crops but permit the importation of biotech products for human and animal consumption.
In addition to contributing to economic sustainability, GM crops also provide an environmental edge. Because they’re more productive, they reduce the pressure to convert wilderness into farmland. The ISAAA estimates that biotechnology already has conserved more than 106 million acres of land.
So let’s return to that opening question: “Who Benefits from GM Crops?” The answer, it turns out, is just about everyone.
Jeff Bidstrup and his family grow cotton, wheat, sorghum and chickpeas in Queensland, Australia. Jeff is the national convenor of the Producers Forum, an organization of farmers whose vision is to ensure timely access to agricultural biotechnologies for the economic, social and environmental benefits of all Australians. Mr. Bidstrup is a member of the Truth About Trade & Technology Global Farmer Network and the 2008 recipient of the Kleckner Trade and Technology Advancement award.

Mr. Obama Goes to Ottawa

Feb 13, 2009
When President Obama visits Canada next week, the weather is bound to be cold--and his diplomatic reception may be a bit chilly too.
That’s because Washington could be on the verge of sparking a trade war with our closest economic partner. Canadians are anxious about protectionism in the economic stimulus bill. They’re bracing for it like a bitter blast of wind from the Arctic.
Even more controversial is Obama’s promise to renegotiate the North American Free Trade Agreement. On the campaign trail last year, he actually threatened to quit the trade pact: “I think we should use the hammer of a potential opt-out,” he said shortly before the Ohio primary.
The story of “Mr. Obama Goes to Ottawa” will receive adoring treatment from much of the media as America’s first black president embarks on his trip to Canada, a traditional courtesy call for a new U.S. president.
Behind the scenes, however, the private conversations between Obama and Prime Minister Stephen Harper will be full of intrigue, and perhaps even worthy of an Oscar for high political drama. Obama, for his part, would be wise to use the trip as an occasion to renounce his threat to withdraw from NAFTA.
Last year, two-way trade with Canada was worth about $600 billion. No other country approached this level of economic activity with the United States. Even the combined totals of our trade with Mexico and Japan are worth less than our exchanges with Canada. Roughly 18 percent of U.S. foreign trade involves buying and selling goods and services with Canadians.
This is a relationship we don’t want to wreck, especially during the challenges of a global economic downturn. Right now, in fact, Obama should look for ways to increase trade with our reliable friends and not to depress it.
Fortunately, when it comes to his most flamboyant anti-trade rhetoric, Obama might not have meant what he said. During the primaries last year, Austan Goolsbee, Obama’s top economics advisor, assured Canadian officials that his boss’s fulminations against NAFTA “should be viewed as more about political positioning than a clear articulation of policy plans.” When the Associated Press obtained a memo that revealed the contents of this closed-door conversation, it set off a minor political controversy.
Later, after securing the Democratic presidential nomination, the public Obama began to sound more like the private Obama. He declared his commitment to the fundamental importance of trade and even suggested that his earlier statements, uttered in the midst of a hard-fought campaign, did not represent his true views.
Nowadays, Obama and members of his administration are more likely to discuss their belief that NAFTA needs improvement in the areas of environmental quality and labor rights. There is talk of having the governments of the United States, Canada, and Mexico form a “consultative group” on the trade pact, which could serve as a forerunner to a fundamental renegotiation.
Nobody truly expects him to take the reckless step of quitting NAFTA, though at least one of his potential nominations raised fears: Obama originally offered the job of U.S. Trade Representative to Xavier Becerra, a congressman who thinks NAFTA was a bad idea. When Becerra declined, he turned to Ron Kirk, the former mayor of Dallas, who supports the agreement.
The major threat to NAFTA isn’t that Obama will push for the United States to withdraw from it unilaterally. Instead, it’s that his administration and Congress will chip away at its foundation, piece by piece.
The “Buy American” clauses in the economic stimulus bill are a perfect example of this harmful approach: They’re not only bad for American workers, consumers and taxpayers, but they almost certainly violate the terms of NAFTA because they build brand-new obstacles for Canadians to participate in the U.S. economy. They may inspire Canada to retaliate, perhaps with its own “Buy Canadian” rules that hurt American exporters. This is how trade wars begin - human nature on a much grander scale.
Obama won the presidential election for many reasons, including his promise to restore the image of the United States abroad. Now his first foreign trip as commander-in-chief requires him to thaw a relationship that suddenly has turned a little frostier than necessary.
Terry Wanzek grows corn, soybeans, and wheat on his family farm in North Dakota.  
Mr. Wanzek serves as a North Dakota Senator and board member of Truth About Trade and Technology (www.truthabouttrade.org)

The Real Costs of ‘Buy American’

Feb 06, 2009
You could say it’s been a good week for steel. The Pittsburgh Steelers won the Super Bowl. A guy named Michael Steele became the chairman of the Republican Party. And U.S. steel producers are giddy about the economic stimulus bill winding its way through Washington.
Steelers fans and Republicans are entitled to whatever joy they feel about these recent events. All of us, however, will pay a high price for Big Steel’s special-interest muscle.
A provision in the economic stimulus bill would require government contractors to purchase steel and iron from domestic producers. Another would demand the Transportation Security Administration buy uniforms made from American textiles.
I understand the emotional appeal of requirements to “Buy American.” They certainly sound patriotic. The members of Congress who sponsor them may even believe they’re acting patriotically. Everyone wants American workers to prosper, after all.
Yet this policy is fundamentally misguided. It would raise the cost of infrastructure projects that are already very expensive --and that means fewer of them actually will get done. At a time when Americans are struggling economically, our public officials shouldn’t squander taxpayer dollars for the sake of feel-good rhetoric. Instead, they should try to make the most of what they’ve been given.
These so-called “Buy American” provisions pose a major test for President Obama in the early days of his administration. Does he understand that the free flow of goods and services across borders promotes economic prosperity? Or does he think that our country can somehow defy the lesson of the 1930s, when the protectionist Smoot-Hawley Tariff Act transformed a bad recession into the Great Depression?
Recent signs are positive. On Tuesday, President Obama voiced some doubts about the “Buy American” scam: “I agree that we can’t send a protectionist message, “he said. “I think it would be a mistake….at a time when worldwide trade is declining, for us to start sending a message that somehow we’re just looking after ourselves and not concerned with world trade.” Obama may want to copy the vice president on his next trade-policy memo. Last week Joe Biden made it sound as if “Buy American” isolationism is just fine. “I don’t view that as some of the pure free-traders view it, as a harbinger of protectionism,” he said. “I don’t buy that at all.”
Biden may not have noticed the irony of his words: “I don’t buy that at all” is precisely the problem. Telling contractors that they can’t purchase material from Big Steel’s rivals limits competition, which leads to wasteful spending.
When California renovated a bridge over the San Francisco Bay in the 1990s, it had to comply with a state rule that required the use of domestic steel unless it was 25 percent more expensive than foreign steel. So guess what? Domestic steel producers charged 23 percent more than imported steel. Douglas Irwin of Dartmouth recently described the unfortunate result: “While this is a windfall for a lucky steel company, steel production is capital intensive, and the rule makes less money available for other construction projects that can employ many more workers.”
It turns out that “Buy American” doesn’t help very many Americans. Instead, it’s a handout to a special-interest group with lobbying clout. Everybody else loses, including American workers whose projects don’t receive funding and American drivers who can’t cross new and improved bridges.
This debate is about far more than what’s in the economic stimulus bill, of course. Protectionism has a way of spreading like a bad virus. As soon as we start building barriers to what other nations can sell here, they’ll start building barriers to what we can sell there. This is precisely what happened in the 1930s, when a struggling global economy came to a grinding halt.
Farmers appreciate the importance of international trade because about one-third of what we grow is sold to foreign consumers--people who already choose to “Buy American” because of the quality of what we produce. The last thing we need is to lose a share of the overseas markets that we’ve earned because Washington wants to pay off a completely different industry.
But that’s what could happen--if Japan imposes a “Buy Japanese” law and Canada institutes a “Buy Canadian” law, all because politicians in Washington sparked a new and unnecessary trade war.
Dean Kleckner, an Iowa farmer, chairs Truth About Trade & Technology. www.truthabouttrade.org
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