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December 2011 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.

Best of TATT 2011

Dec 29, 2011

 By Mary Boote

               
In a few days, the year 2011 will belong to the history books. Here’s what some of the farmers who offer their voices to Truth about Trade & Technology said while 2011 was still happening.
 
The biggest news involved trade--and the headline of an October column by Chairman Dean Kleckner put it best: "At Last!" (10.20.11)
 
Following five long years of frustrating inaction, Washington finally approved its free-trade agreements with Colombia, Panama, and South Korea. "There’s plenty of credit to go around," wrote Kleckner. He thanked President Obama and bipartisan majorities in Congress for putting the economic good of the country ahead of protectionist special interests. He also tipped his cap to President Bush, whose administration negotiated the agreements.
 
Leading up to this moment, TATT pushed hard for passage of the trade pacts. "The president’s trade agenda is sinking," warned Terry Wanzek in March (3.17.11 Past Time...). The next month, Carol Keiser (4.7.11 Exports Matter) expressed her aggravation with the delay: "We have to get serious about exports--and somebody in Washington needs to think creatively about pushing for trade." In June, John Reifsteck (6.2.11 Conventional Trade Wisdom) tried to remind lawmakers of America’s free-trade legacy: "Once upon a time, the United States worked hard to boost exports by striking trade deals."
 
When frustration transformed into success in October, TATT immediately turned its attention to what should come next on the U.S. trade agenda. Obama already has identified the Trans-Pacific Partnership as a top priority. In November, Kleckner (11.23.11 TPP Needs TPA) called for its completion in 2012: "TPP is like a jobs program that doesn’t require the federal government to spend a dime."
 
A separate idea involves more bilateral trade agreements--including one with Egypt, as recently proposed by Congressman David Dreier. Back in February, at the start of the "Arab Spring," Tim Burrack (2.10.11 Feeding Unrest) suggested that trade could improve conditions throughout the Middle East: "The free flow of goods and services across borders won’t alleviate every catastrophe, but it can keep bad situations from growing worse."
 
Another bold initiative, called "Transatlantic Zero," seeks the elimination of tariffs between the United States and the European Union. "The only thing separating us should be an ocean," wrote Kleckner (12.15.11 Transatlantic Zero…).
 
Biotechnology scored its own big success in 2011, passing a significant milestone: Farmers have now planted more than 3 billion acres of genetically modified crops.
 
"How big is 3 billion acres?" asked Richard Dijkstra, a Brazilian farmer and member of TATT’s Global Farmer Network. (11.3.11 Three Billion Acres…) "It’s bigger than the Amazon rainforest. It’s bigger than all of Brazil. It’s big enough to say with absolute certainty that biotechnology is now a thoroughly conventional variety of agriculture."
 
That’s a good thing, too. "Without biotechnology, we wouldn’t be able to come anywhere close to supplying the world’s demand for food," he wrote"
 
That demand is growing. Right after demographers announced that the world has 7 billion people in it, Gilbert Arap Bor--a Kenyan farmer who was this year’s recipient of the Kleckner Trade & Technology Advancement Award--put this number in perspective (11.17.11 African Farmers Will Help Feed the Billions): "The greatest challenge of our time will be to figure out how we’re going to put food in all of these mouths." He said that success will require farmers in developing countries to have access to modern agricultural technologies.
 
Anti-GM activists continue to oppose the world’s hunger fighters. When Greenpeace attacked biotech test plots in Australia, Germany, and the Philippines, Global Farmer Network member Jeff Bidstrup (7.28.11 Greenpeace Declares War…) offered a quip: "You might think that a group called Greenpeace wouldn’t be so warlike."
 
In the United States, anti-biotech protestors called for warning labels on all kinds of food. "These plotters would have you believe that they’re just a lovable band of foodies who are taking on big, bad corporations," observed Ted Sheely (3.31.11 Labeling a Rally...) in March. "In reality, this is a classic case of a special-interest group trying to manipulate the federal government in order to gain a competitive advantage over its rivals."
 
When Prince Charles tried to lecture Americans on how to farm, Bill Horan (5.12.11 Royal Skepticism…) delivered a rapid-response reply. "The Prince of Wales turned me into the prince of wails--I wanted to howl in anguish over this man’s bizarre views on agriculture," wrote Horan. "Who is this guy to lecture anybody on sustainability?"
 
In May, John Rigolizzo, Jr. (5.19.11 Innovative Greening…) pointed out that gene-transfer can provide unexpected benefits. "Can biotechnology save the American chestnut tree?" he asked. "The early evidence is encouraging--but success will require scientific ingenuity as well as the public’s full acceptance of genetic modification."
 
That’s a quick summary of our year--except that no summary of TATT’s 2011 would be complete without mention of our book, which sums up so much of what we’ve done on behalf of trade and technology for over 10 years.
 
"You might assume that farmers know more about rootworms than bookworms, but that’s not necessarily true," I wrote in June. "It certainly hasn’t stopped the men and women of Truth about Trade & Technology from publishing ‘The Food Security Reader.’ ... If we were a rock band, this would be our album of ‘greatest hits.’"
 
We look forward to rocking on in 2012.
 
Mary Boote serves as Executive Director for Truth About Trade & Technology - www.truthabouttrade.org

How the Butter Tariff Grinch Almost Stole Christmas in Norway

Dec 22, 2011
By Carol Keiser:  Belleair, FL
 
As we celebrate the Christmas holiday, I’m thankful for faith, family, and rich traditions.  And this year, I’m tempted to add the fact that I don’t live in Norway to my list--a country that suddenly has found itself without butter.
 
Over the next few days, butter is not an option for me. At my daughter’s home, we’ll bake sugar cookies with a lot of it. When the cookies come out of the oven, my seven grandchildren will form an assembly line and decorate them with icing, sprinkles and giggles.
 
It’s one of our family’s Christmas traditions.
 
We’re hardly alone. Around the world, millions of others have their own rituals involving Christmas and food – including cookies. Many of them will use good, wholesome butter.
 
But not in Norway, where people find themselves trapped in an awful predicament at precisely the wrong time.
 
During the Cold War, the Soviet Union used to have bread lines. This month, Norway has witnessed the birth of butter lines. According to some reports, desperate Norwegians have paid as much as $500 for a pound of butter.
 
Norway’s butter shortage is an entirely man-made political problem. There’s no sensible reason why Norwegians, who enjoy one of the world’s highest per-capita GDPs, ought to run out of something as basic as butter.
 
The rest of us should learn from Norway’s mistake--and get behind trade policies that will allow us not only to bake delicious cookies at Christmas, but to maintain our food security year round.  Especially when we are talking about the availability of food staples.
 
Norwegians lack butter right now because their government uses tariffs as steep as a fjord’s cliffs to keep people from importing it.
 
In a normal year, high tariffs would lead merely to artificially inflated consumer prices. This summer, however, it rained a lot in Norway, hurting the quality of animal feed and leading to poor production on dairy farms. Meanwhile, many Norwegians are choosing low-carb, fat-rich diets. So Norway’s demand for butter is high, but right now its supply is low.
 
The current shortfalls are the result. They’re expected to last into next month.
 
The rational solution would be to buy butter from foreign producers. This is what many ordinary consumers have done; turning to supermarkets in Sweden, where butter is plentiful and grocers love the extra business. There are even reports of butter smuggling: A Russian man was arrested as he tried to sneak 200 pounds of butter into Norway.
 
The United States has the DEA, also known as the Drug Enforcement Agency. Does Norway need a BEA?
 
In fairness, it must be said that Norway’s conundrum isn’t a case of ordinary protectionism. Norway imposes high tariffs to prop up the Norwegian dairy industry--and not for entirely bad motives, as Matthew Yglesias observes in an article for Slate. Much of the country’s wealth comes from oil, which generates a high-value currency and the possibility that high-octane purchasing power will create a flood of imports that destroys the domestic production of just about everything except North Sea oil drilling.
 
Even so, Oslo seems to understand that its butter tariffs have become a big problem. It has sliced them by 80 percent and promised to keep them at this level at least until March.
 
A nation that takes pride in awarding the Nobel Prize in Economic Sciences each year probably should realize that meddling in markets invites serious risks. Protectionism of any sort always comes with a steep price.
 
Norway’s population is less than 5 million. Maryland and Minnesota have more people. A country so small can’t produce everything it needs and also maintain a high standard of living. This is especially true when the country is cold, limiting its agricultural potential.
 
Even if Oslo were to eliminate its butter tariff, the United States probably wouldn’t take over the Norwegian butter market. Denmark is a big dairy producer. It’s closer, too. However, we can all profit from Norway’s butter fiasco by learning the right lesson: High tariffs created shortages and low tariffs create abundance, as we buy and sell goods and services across borders.
 
My wish for you as you gather with family and friends is that the foods important to you and yours are available this holiday season and the New Year.  Food Security is a priceless gift. Lawmakers and other public officials who prefer trade restrictions to free-trade agreements deserve one thing for Christmas this year: coal in their stockings.
 

Carol Keiser owns and operates cattle feeding operations in Kansas, Nebraska and Illinois.  She is a Truth About Trade & Technology board member.   www.truthabouttrade.org 

Transatlantic Zero: A Winning US-EU Trade Proposal

Dec 15, 2011

By Dean Kleckner, Chairman

 
It’s time for America to zero out its relationship with Europe.
 
No, I don’t mean we should cut ties. Quite the contrary: We should cut tariffs, zeroing them out so that no artificial barriers stand between the United States and the members of the European Union as they exchange goods and services.
 
The only thing separating us should be an ocean.
 
The idea is called "Transatlantic Zero" and it’s catching on as a great way to promote economic growth and opportunity.
 
Global trade talks have failed. The Doha round of negotiations died years ago--a sad fact that few officials will admit in public, but many will acknowledge privately. American efforts in trade diplomacy should shift away from negotiations sponsored by the World Trade Organization and reorient themselves toward more achievable goals, such as bilateral deals with other countries or multilateral arrangements within regional partnerships.
 
This fall, we tasted free-trade success when President Obama and Congress finally approved accords with Colombia, Panama, and South Korea. Now there’s talk about opening conversations with Egypt. For 2012, the Obama administration hopes to wrap up the Trans-Pacific Partnership, a trade initiative that currently includes the United States and eight other countries (and could grow larger).
 
A free-trade agreement with Europe would provide a big boost to our stagnant economy. President Obama and a pair of his European counterparts--European Commission President José Manuel Barroso and EU Council President Herman Van Rompuy--recognized this two weeks ago, when they met at the White House. After their summit, the three men issued a joint statement: "We must intensify our efforts to realize the untapped potential of transatlantic cooperation to generate new opportunities for jobs and growth."
 
Combined, the United States and the EU generate half of the world’s economic output. They also account for one-third of global trade, even though both sides place obstacles in the way of buying each other’s products.
 
Food producers and consumers both have a big stake in this.
 
Do you enjoy wine from France or other parts of Europe? There’s a hidden tax built into the price you already pay: an average tariff of 4.3 percent. For American winemakers, it’s even worse: A Parisian who wants a taste of Napa Valley must fork over an average tariff of nearly 9 percent.
 
If we knock down these barriers, Americans will pay less for their imported wine and Europeans will drink more American wine. It makes me want to propose a toast to Transatlantic Zero--and the jobs it would create everywhere from wineries to restaurants.
 
And wine is just one of many products. Europeans bought $834 million in fruits, vegetables, and juices last year, even though they pay high tariffs. For fruits and vegetables, it’s in the range of 15 to 20 percent. For American-made juices, the special tax is 37 percent. Take these away and suddenly Europeans will have more money to spend on what we grow here.
 
Farmers and ranchers have a lot to gain from Transatlantic Zero: This year, U.S. farm exports to Europe will be worth an estimated $11 billion. So do Americans involved in other industries. One study says that phasing out tariffs over the next several years would lift America’s gross domestic product by $182 billion in 2015.
 
At a time when the United States suffers from a sluggish economy and an official unemployment rate of about 9 percent, this sounds like an opportunity we can’t afford to turn down.
 
Even more essential than boosting sales is the matter of trade facilitation--the need for the United States and Europe to harmonize their regulations and standards, so that both may remain globally competitive. It requires each side to confront thornier issues that continue to divide, such as the use of growth hormones in beef and biotechnology in crops.
 
The payoff in this area is hard to calculate--but it would be enormous, and a free-trade agreement almost certainly would push us toward a healthy solution.
 
Zero has never looked so good.
 
Dean Kleckner chairs Truth About Trade & Technology (www.truthabouttrade.org)

Request for Consideration: An FTA with Egypt

Dec 08, 2011

 By Dean Kleckner – Des Moines, Iowa

 
The next time you pay for something with a dollar bill, think of Congressman David Dreier’s new proposal involving Egypt.
 
Last year, Americans and Egyptians traded dollar bills 9 billion times. At least that was the value of two-way trade between our countries: $9 billion.
 
A lot of this value started out on American farms. Egypt was the fourth most important destination for U.S. exports of corn and wheat.
 
Dreier, a California Republican, would like us to trade even more. He’s trying to persuade the Obama administration to begin trade talks with Egypt. It’s a bipartisan cause, joined by Rep. Gregory Meeks, a Democrat from New York.
 
If the White House agrees and the negotiations succeed, Americans will have a chance to exchange goods and services worth many more dollar bills—U.S. currency that have a symbol of ancient Egypt on their back sides.
 
You know the image: It’s the funny-looking one that’s part of the Great Seal of the United States, featuring a pyramid topped by an eye.
 
Much has been said about the meaning of the Seal. If you spend too much time on Google, you run the risk of visiting some kooky websites.
 
But it’s really quite simple. The Roman numerals at the base of the pyramid say "1776" and the eye at the top is a representation of God, beneath the Latin words "Annuit Coeptis," which means "he has approved of the undertakings." In between, of course, is the pyramid itself--a symbol of strength and duration, comprised of 13 levels, one for each of the original colonies.
 
The most famous Egyptian pyramid--the big one at Giza--has a lot more than 13 levels. It’s about 480 feet tall (and believe me, when I saw it, I was impressed). It’s also about 4,500 years old, making it strange to think of 21st-century Egypt as a "developing" country.
 
Whatever we make of this symbolism, boosting our trade with Egypt is sensible for reasons of economics and national security.
 
Egypt must import food to survive. More than 80 million people live within its borders, virtually all of them beside the Nile River. Most of the rest of the country is desert. The arable land is basically limited to the banks of the Nile--and there isn’t enough of it to support the population.
 
The country’s greatest need is wheat. American farmers already supply a lot of this, especially when drought hits Ukraine and the Black Sea region or when those countries compound the problem by imposing export quotas on their crops. We also sell corn and soybeans, tied to Egypt’s emerging market in milk and poultry production. A trade agreement will help us do better in all of these areas.
 
In the future, the United States also will enjoy a remarkable opportunity to take advantage of Egypt as a destination for American-raised beef. The country’s growing middle class will demand these products, but Egypt doesn’t have enough range land to satisfy its own market. We should make sure the business comes our way.
 
Egypt’s food supply is not just an economic opportunity, but also a national-security priority. Earlier this year, a popular revolt forced an end to the rule of Hosni Mubarak as Egypt’s leader. What comes next is a mystery. Cairo in 2011 isn’t Philadelphia in 1776: We aren’t going to see this Arabic country become a liberal republic, at least not in the near term. It could even fall to the forces of Islamic radicalism, which would make the world a much more dangerous place.
 
To nudge Egypt in the right direction--and guard against disaster--we should improve our trade ties.
 
"Expanding our economic engagement is the most important step we can take to ensure that the Arab world’s largest nation emerges from its transition as a strong, stable, and prosperous democracy," says Dreier.
 
The Dreier-Meeks legislation can’t force the Obama administration to do anything. It simply calls on the executive branch to seek a free-trade agreement. Consider it as a polite request.
 
Yet it’s the right thing to do. Every time you look at the pyramid on a dollar bill--and see that unblinking eye gazing up at you--let it remind you of a free-trade agreement with Egypt.
 
Dean Kleckner chairs Truth About Trade & Technology - www.truthabouttrade.org

Farm Production Success in the Ukraine Will Require Change

Dec 01, 2011

 By Tim Burrack: Arlington, Iowa

 

Traveling through Ukraine and looking at its farmland is like a trip in a time machine for someone who farms in Iowa. Every mile you drive away from Kiev, the capital city, takes you back a year. The facilities, the machinery, the way the people live--it’s a window into the past.

 

You find villages with the town water source an open well with a winch and a pail on a chain.  You see horse-drawn wagons that move feed and people.  And livestock that is driven out to the fields in the morning and back home at night.

 

Yet this region is essential to the world’s food security. The global population just topped 7 billion and most demographers say it will keep on growing for decades to come. To keep up with demand, farmers everywhere must double their crop yields by the middle of this century--and bringing Eastern Europe and Ukraine into the modern world of agriculture should be one of our highest priorities.

 

Success will require changes in technology, politics, policies and attitudes. But if the world is to have enough food, we’ll have to do a much better job of producing crops in this part of it--and my own experience of farming for about half a dozen years in Ukraine tells me that we can. It just won’t be easy.

 

Most of the world’s best farmland is already committed to agriculture--so in our quest to double production, we can’t simply plant more of it. We have to do a better job with the acreage we’ve got, taking areas that underperform and helping them improve.

 

In this regard, we hear much about Africa, which lags the rest of the world in food production.

 

But we can’t lose sight of other areas that have their own catching up to do. In the Black Sea region of Ukraine, Russia, Kazakhstan, Moldova, and Georgia, farmers produce wheat at two-thirds the rate of farmers in the United States. The results with other crops are even worse. They produce only half as much in soybeans and 40 percent as much in corn.

 

Perhaps it’s not fair to compare farmers in these struggling nations with the best in the world, but we shouldn’t necessarily expect less of them. Ukraine is blessed with many of the ingredients for high-yield production. The dirt is black and beautiful and at least as good as anything I’ve encountered here in Iowa. The climate is a little drier, but the region is still a breadbasket.

 

I’m convinced that with the right kind of management and policies, farmers in this region could grow twice as many crops as they do now.

 

At one time, I had hoped to help out. More than a decade ago, one of my friends went on a mission to Ukraine to hand out Bibles. He came back with stories about rich farmland that needed better machinery. A group of us made an investment. We pooled our resources, bought equipment, and started a farming operation.

 

We began with about 2,000 acres and worked our way up to 14,000. But we found that it was almost impossible to conduct ordinary business. We were constantly asked to pay bribes. One time, we shipped a pair of four-wheel-drive tractors to Odessa. They were there one day and gone the next. They vanished from the docks and we never saw them again.

 

We learned that Communism had crushed the souls of the people. They lacked initiative. Whenever we asked them to do something that seemed to depart from custom, we had trouble. If we asked them to work a field at an angle, in order to improve the tillage, they’d follow our directions until we were gone--then they’d go back to doing things the old-fashioned way, even though it was less efficient.

 

Government policies complicate the matter as well.  Kiev refuses to pay value-added tax refunds to foreign investors.  Export taxes also hurt productivity.

 

Ukrainian farmers were exceptional at one thing: mechanical repairs. Because new machinery is so rare, they know how to take junk and make it function. I just wish they could adapt the same ingenuity to agriculture production as a whole.

 

One step might involve the introduction of biotechnology. Right now, almost nobody in this region grows GM crops, according to the International Service for the Acquisition of Agri-biotech Applications (ISAAA). There’s a little activity in the fields of Poland and Romania, but essentially none in Ukraine, Russia, or their neighbors.

 

The European Corn borer is a very serious pest that causes huge corn losses in this part of the world.  Currently, they release butterflies in an attempt to control the corn borer.  It was quite clear that this attempt at pest management was worthless.  Allowing Bt corn to be grown here would raise corn yields 30% to 40% by reducing the loss they are experiencing from this pest alone!

 

If we help this region step into the present day, we’ll begin to secure future food needs.

 

Tim Burrack raises corn and soybeans on a NE Iowa family farm.  Tim volunteers as a Board Member of Truth About Trade and Technology.  www.truthabouttrade.org

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