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May 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.

Needed - A Concrete Accomplishment

May 28, 2009
Theodore Roosevelt believed the construction of the Panama Canal was “by far the most important action I took in foreign affairs during the time I was President.”
He thought that his feat was born of bold political action, too: “I took the Canal Zone, and let Congress debate, and while the debate goes on the canal does also.”
President Obama faces a similar leadership challenge, also involving Panama. He can let the debate about the merits of a free-trade agreement with Panama run on indefinitely, like a never-ending academic seminar. Or he can move now to make sure the United States finally implements a mutually beneficial accord with this small Central American country.
Although Obama often sounded like a protectionist when he campaigned last year, his initial moves in the White House have indicated a possible change of heart. What he lacks at this point is a concrete accomplishment. Concluding the Panama accord, an objective that eluded the Bush administration, would represent a solid success in the early days of his term.
U.S. trade representative Ron Kirk recently observed that there is “a window to move forcefully” to get the deal done by July 1, when current Panamanian president Martin Torrijos steps down from office.
The agreement certainly makes sense for the United States. Our markets are essentially open to Panamanian products. Last year, we imported $377 million in goods from Panama. More than 90 percent entered duty free.
By contrast, we exported nearly $5 billion to Panama. Many of these made-in-America products faced tariffs. The average duty was more than 6 percent, though for some items the rates soared far higher. This is especially true for agriculture. Assistant trade representative Everett Eissenstat recently noted that Panama’s tariffs can rise to 70 percent for meat, 90 percent for grain, and a whopping 260 percent for chicken.
Under the trade agreement, we’d benefit from a balanced playing field. The pact would eliminate tariffs on 88 percent of our exports right away, including 60 percent of farm goods. The rest would phase out over time.
In a few areas, the advantages of the trade agreement for farmers would be significant but not obvious. Senator Charles Grassley of Iowa, for instance, has noted the value of having Panama “lock in” its current zero tariffs on soybeans imported from the United States.
Whenever two countries remove artificial barriers to the flow of goods and services, they create more economic activity--including the creation of new jobs, which should be a priority for Washington these days.
Yet the present opportunity in Panama involves more than greasing the skids of existing trade. Today, Panama is home to one of the world’s biggest economic-stimulus projects: The historic expansion of the canal between the Atlantic and Pacific Oceans, to modernize it for the 21st century.
As I personally witnessed during a trip in February, they’re blasting rock now. For the United States, the choice is simple: Do we want to watch, or do we want to help them build?
If we’re content to sit back and watch, then we don’t need to do anything. We can let the trade agreement languish as Congress continues to bicker, which is what it does best. Meanwhile, our competitors in Canada, Europe, and elsewhere will be happy to sell Panama all of the equipment and services it needs to complete this massive public-works project.
But if we want to reap the rewards of participating in a $5.25-billion endeavor, Obama needs to act with the resolve of Roosevelt: He must get this trade agreement approved. The age-old debate over free trade and protectionism can go on as before. So can the expansion of the Panama Canal, but now with the full involvement of American companies and workers.
In other words: They will build it. Will we come?
The result probably won’t be “by far the most important action” Obama takes in foreign affairs during his presidency. But it will establish an achievement upon which larger legacies may be built.
Tim Burrack raises corn and soybeans in partnership with his brother on their NE Iowa family farm. Tim is a Board Member of Truth About Trade and Technology www.truthabouttrade.org

Biotechnology: An Agriculture Success Story

May 21, 2009
To hear the anti-biotech crowd talk, you would think that farmers are a bunch of gullible fools who don’t know their own business. That’s what I think whenever I hear Friends of the Earth or some other group of professional protestors claim that genetically modified crops don’t deliver benefits to the public.
They’ll have trouble refuting a comprehensive report released on Wednesday at the BIO 2009 International Convention. It proves beyond any reasonable doubt that biotech crops are good both for the environment and the economy, as well as a vital tool of sustainable agriculture.
The author of the study is Graham Brookes, director of PG Economics Ltd., a British firm. I joined him at the convention in Atlanta to discuss his research.
One of the report’s most important findings involves greenhouse gases. In 2007, farmers who planted GM crops reduced carbon-dioxide emissions by more than 14 billion kg. That’s like removing more than six million cars from the road for an entire year. Farmers in the United States alone accounted for 4.3 billion kg, which is equivalent to the exhaust of almost two million cars.
How are we able to do it? The simple truth is that we don’t have to run our tractors nearly as much in order to control pests and weeds. By burning less fuel in our fields, we pump fewer greenhouse gases into the atmosphere. Thanks to biotech crops, I’ve reduced my time in tractors by about 50 percent.
That’s an environmental benefit for everybody, an economic benefit for consumers, and a personal benefit for me: This technology has afforded me the opportunity to spend more weekends with my family, a definite quality-of-life improvement, made possible by technology.
GM crops also have reduced pesticide use by 359 million kg, or about 9 percent between 1996 and 2007. Chemical sprays are a necessary part of food production--and they’re safe--but we all strive to reduce their use. Once again, this involves a savings for producers (which we pass on to consumers), plus an environmental benefit: Brookes calculates that acres that support biotech crops cut their herbicide and insecticide applications by more than 17 percent.
Yields have gone up, too--an important factor if we’re to feed a growing world population and conserve wilderness habitat simultaneously. In 2007, biotechnology boosted soybean yields by almost 30 percent. Other commodities made substantial gains as well: corn (7.6 percent), cotton (almost 20 percent), and canola (8.5 percent). Since 1996, biotech traits have added 68 million tons of soybeans and 62 million tons of corn to the global food supply.
Where I live--in Stutsman County, North Dakota--the changes are obvious. In 1996, farmers in my area planted 2,600 acres of soybeans and harvested 24.4 bushels per acre, according to USDA records. By 2007, they had discovered the advantages of biotechnology: They planted 295,000 acres of soybeans and harvested 37.2 bushels per acre. We don’t enjoy a bumper crop every season--last year, for instance, poor weather hurt soybean production--but the gains over time are big. Many farmers have switched from growing wheat, a traditional crop in our parts, to growing biotech soybeans and corn.
I don’t credit every single advance to biotechnology. Farmers are always striving to improve, and we’ve adopted new technologies that have nothing to do with genetic modification and tilling practices that help the soil. Yet biotechnology is a key to our success.
Going forward, we should seek to apply its benefits to other commodities, such as wheat. Progress to now has been slowed by politics and ignorance rather than scientific know-how. But last week, wheat growers in Australia, Canada, and the United States announced publicly that they would work together toward simultaneous commercialization of biotech wheat to minimize market disruption. “We believe it is in all of our best interests to introduce biotech wheat varieties in a coordinated fashion,” said industry groups in a joint statement.
The sooner we’re able to plant genetically enhanced wheat, in North Dakota and elsewhere, the sooner we’ll enjoy even more environmental and economic benefits from biotechnology.
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)

Food Security

May 14, 2009
About a million people died during the Irish potato famine in the 19th century. Yet during this terrible time of mass starvation, Ireland was actually exporting food to England.
Imagine the outcry today if a new famine were to hit Ethiopia--and the government in Addis Ababa nevertheless allowed tons of locally-grown food to leave the country for the benefit of foreign consumers. It would invite loud condemnations from abroad and spark political unrest at home.
Yet we may see episodes such as this unfold in the not-too-distant future, if food-importing nations continue to buy farmland in the developing world at their current pace. Since 2006, they’ve purchased 20 million acres, mostly in Africa, according to the International Food Policy Research Institute (IFPRI). The buyers have obtained this farmland in the name of their own food security.
The desire for a dependable source of food makes sense, but this particular approach won’t bear fruit. Rather than trying to buy farmland in faraway places, the food importers should work to improve the free flow of global trade. They’ll be much better off for their efforts, and so will everyone else.
The real-estate rush is beginning to capture the attention of journalists and the public. Business Week called it the “land grab for the world’s farms.” Countries such as China, Egypt, Japan, South Korea, and the United Arab Emirates are scooping up land in agricultural regions.
In recent months, Saudi Arabian investors have paid $100 million for a wheat and barley farm in Ethiopia as well as for tracts in Sudan. They’ve also bought rice paddies in Indonesia and Thailand. China is a major player as well, with huge farms in Algeria, Mozambique, and Zimbabwe that may employ a million Chinese laborers.
The motivation is understandable. Saudi Arabia is a big desert where almost nothing grows. China has a lot of arable land, but not enough to support its own massive population. These countries, and many others, have no choice but to look beyond their borders for food.
What they’ve done, however, is confuse food security with self-sufficiency.
Food security involves the availability of food and easy access to it--an important consideration in a world that will soon have grown to a billion hungry people, according to the United Nations. Food insecurity can lead to malnourishment and starvation.
Thankfully, food security does not require self-sufficiency. Although countries everywhere seek to grow their own food, they don’t have to behave as if they’re in isolation, cut off from the rest of the planet. Farmers and consumers can trade goods and services across borders. Countries that don’t produce enough calories--because of a poor climate, bad soil, an urbanized population, or whatever--can buy them from those that produce more than enough.
A stable system of global trade in agricultural products is therefore essential. To a certain degree, we already have this. But we can do much better. Protectionism distorts trade in food more than any other commodity. World leaders should push for further reforms, through individual trade agreements such as the proposed pact between the United States and Colombia, as well as through comprehensive accords such as the Doha round of global trade talks.
This is how nations will achieve food security: When buyers and sellers can meet on a level playing field, one that isn’t tilted by political interference in the form of tariffs or taxes.
Governments that think real-estate acquisitions in developing countries represent a new path to food security are fooling themselves. Their rights to these farmlands may appear safe today, but they will be violated the moment trouble strikes. In Madagascar, a plan to lease more than 2 million acres to South Korea for 99 years contributed to violent riots and the president’s ouster earlier this year--and this was just over a prospective plan, not one that was actually doing for Madagascar what exports did for Ireland during the great potato famine.
We should let markets work, even across borders. When the world needs more food, farmers will grow it and sell it, both for their own communities and the wider world.
Dean Kleckner, an Iowa farmer, chairs Truth About Trade & Technology. www.truthabouttrade.org

Trade Trumps Aid

May 07, 2009
Ralph Waldo Emerson said that a foolish consistency is the hobgoblin of little minds.
As a White House candidate, Barack Obama declared a willingness to renegotiate NAFTA and possibly even quit the continental trade accord. He also opposed a modest free-trade agreement with Colombia, our closest Latin American ally.
Last week, however, President Obama reversed course. His administration announced that it does not intend to reopen NAFTA talks, and the president himself signaled an interest in passing a trade pact with Colombia.
These are two very welcome developments. He has corrected a wrongheaded position, and his decision will deliver economic benefits to Americans.
A year ago, Obama’s attacks on NAFTA were blatantly protectionist. “I think we should use the hammer of a potential opt-out,” he threatened. One of his chief economic advisors, Austan Goolsbee, privately told Canadian officials not to worry: This was just overheated campaign-trail rhetoric. When Goolsbee’s assurances were leaked to the press, he was all but fired for contradicting his boss.
Now Obama has backed away from his public pronouncements and embraced the views of his subordinate. NAFTA is safe, for now.
Up to this point, Obama has done nothing but toss up roadblocks to the trade agreement with Colombia--a deal that our trade negotiators informally completed during the Bush years. Colombia is a country of 45 million people. A deal now waits congressional approval before it can become official. But Congress has refused even to give it an up-or-down vote.
Obama has recently ordered U.S. Trade Representative Ron Kirk to make the agreement become a reality. Perhaps the controversy surrounding the president’s handshake with Venezuelan strongman Hugo Chavez had something to do with it. The particular motive hardly matters. If all goes well, we can expect a few minor amendments that will allow Obama and a few fence-sitting members of Congress to say their concerns about environmental and labor conditions in Colombia have been met, and finally seal a deal that should have been done long ago.
In the current financial climate, any measure that stalls trade or makes it more difficult for capital to flow across borders is equivalent to tearing up roads and ripping out railroad tracks: They deliver serious blows to the world’s economic infrastructure, and hurt American workers whose jobs depend upon foreign markets.
Russia recently announced a range of new tariffs, including special fees on equipment built by Caterpillar and Deere. This is exactly the type of protectionism we must defeat. One of the hard lessons of the Depression is that protectionism, such as the notorious Smoot-Hawley Tariff Act, can take a bad economic situation and make it even worse.
Encouraging Russia to act responsibly may be a challenge. But the symbolism and reality of the US reaching out to a Colombia on trade has far reaching effects. Resuming growth in jobs is a process that will be built incrementally; with foreign trade being a key. Farmers will profit, too, because suddenly a range of products will receive duty-free access to Colombian buyers: high-quality beef, wheat, cotton, soybeans, and a variety of fruits.
As we open our minds to what trade means, always remember that there are jobs in handling and distribution of goods both incoming and outgoing. Foreign trade is always much more than the production of raw materials and goods. That’s why the president shouldn’t stop with Colombia. Next, he ought to call for the successful passage of existing trade deals with Panama and South Korea. And he should order Kirk to identify new countries that will offer economic opportunities to Americans, if only their markets can be opened to products made in the USA.
When it comes to improving our prosperity, trade always trumps aid.
The hobgoblins are at bay, at least for the time being. While we have a chance, let’s run them into extinction.
Reg Clause raises cattle, corn and soybeans on a fourth generation family farm in central Iowa. He is a Truth About Trade and Technology board member (www.truthabouttrrade.org)
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