| AUGUST 20, 2011 -- Remember as a kid on Halloween when you were dressed and ready to go but your little brother was still getting ready? All you could think about was how the candy was going to be gone by the time you got to trick-or-treating and it was going to be all his fault. Unfortunately, American farmers are in a very similar situation, except the little brother is Congress and the candy is global market share for U.S. farming exports. The debt ceiling debate took up so much time the last couple months that few other issues have been addressed by Congress. One such issue is the delay of passage of free trade agreements between the United States and Columbia, Panama, and South Korea. All three agreements contribute roughly $13 billion to the United States economy per year and in our absence, other countries such as Canada are starting to swoop in and usurp that additional market share.
Trading status with Columbia has especially become a concern, as they import 97% of their wheat supply, and traditionally from the U.S. However, in less than three years American share of that market has dwindled from 70% to 45%. Everyone should find this extra frustrating because the FTA with Columbia that has yet to pass contains a provision to eliminate 80% of tariffs on U.S. goods. Because we are no longer taking up that market share, Canada has developed its own FTA with Columbia and should begin exercising that agreement within the next month. Their entrance into the market will drop U.S. market share by an additional 50% or more. According to the U.S. Wheat Associates, U.S. wheat growers could lose over $100 million in annual wheat sales because of the delay in re-implementing our free trade agreement with Columbia.
The South Korean and Panama FTAs are having an adverse effect on U.S. exports as well. South Korea purchased nearly $190 million worth of products from Montana alone last year. This was a 141% increase from the previous year (imagine where business could go if trade agreements were stable). Consequently, Asian nations have recently been seeking to improve their trade relations between each other in an attempt to reduce partnerships with the U.S., whose reputation as a consistent trading partner is quickly dissolving. China is already South Korea’s number one trading partner and there are discussions currently in the mix to increase that trading volume. Panama had doubled its American imports in the last five years, but it is now doing more business with Canada and Europe, whose products are cheaper than tariff-heavy U.S. goods. All of this could be remedied if Congress would just hurry up and pass the FTAs that have been waiting on the shelf for months.
So what’s the holdup? For starters, the debt ceiling debate took twice as long as everybody anticipated and only fueled the political gridlock that embodies Washington these days. Second, House Republicans and Senate Democrats have yet to reach an agreement regarding the Trade Adjustment Assistance program. TAA is a spending program that works to retrain Americans who have lost their jobs due to increased imports or from companies moving labor operations overseas to cheaper facilities and less restrictive labor conditions. The continuation of TAA had originally been strapped to South Korea’s FTA and Republicans are objecting, saying there should be a stand-alone vote to extend the program. The measure is scheduled to be addressed in September when Congress returns from recess, but if it receives Washington’s usual hospitality, god only knows when it will actually pass.
In the end, the holdup on FTAs comes down to Washington’s usual problem: a lack of bipartisanship and political unrest. Canada and other countries are more than happy to soak up what we’re not using and who could blame them. With a potential $13 billion to be had, you’d be a fool not to act on that opportunity. Congress needs to get home, shake off its debt ceiling dizzy spell and get U.S. farmers back in a position to compete. Let’s just hope they do it before all the good markets are gone.
-Grace Boatright
National Grange Programs Assistant |
