Errol Rice: We are a Global Business
Free trade is on the minds of Congress, MSGA and many U.S. business executives these days as the White House looks to push for reauthorization of Trade Promotion Authority (TPA) as well as a watershed Pacific trade deal with Japan and 10 other countries. The Japan agreement is better known as TPP. Congress is also weighing in to modify mandatory Country of Origin Labeling (COOL) requirements.
MSGA was actively involved in the formation of COOL legislation during the 2002 Farm Bill. Since that time, the program has been challenged in the World Trade Organization (WTO) by Canada and Mexico. The WTO’s Appellate Body has determined that our COOL requirements unfairly discriminate Canada and Mexico’s beef exports. Canada and Mexico are now seeking more than $3 billion per year in sanctions against a variety of U.S. exports. According to the Canadian Embassy in Washington, D.C., the top Montana exports affected by retaliation include cattle, cherries, corn, pasta and jewelry valued at right around $10 million.
MSGA has long supported COOL, but realizing the significance of retaliation, the MSGA Beef Production and Marketing Committee and the Board of Directors adopted new interim policy on June 6th. The policy supports the repeal of our current COOL statute and then work to develop a comprehensive, broad-based labeling program for U.S. beef.
On June 10th, the House passed H.R. 2393, the COOL Amendments Act, by a vote of 300-131. H.R. 2393 amended the Agriculture Act of 1946 to repeal mandatory COOL. As I write this piece, the Senate Agriculture Committee is deliberating on its own version of a COOL bill. The Senate may have some hurdles to jump to get the required 60 votes for full repeal but we will be monitoring and weighing in on this very actively in the next several weeks.
Since 1974, Congress has enacted TPA legislation that gives the President guidelines on negotiating trade agreements while giving Congress the final up or down vote. A consensus version of TPA passed through both the House and Senate this month and is headed to the President’s desk (as of this writing). MSGA has worked very hard to ensure that agriculture and business has the balance of power to get TPA reauthorized.
Our point of view is that there was a time when the largest part of our economic activity was domestic, but now our future depends on our ability to be globally competitive. TPA is key to accessing the additional demand from the 96% of consumers that live outside the United States. TPA eliminated tariffs on U.S. beef by 40%, 20% and 89% in Korea, Panama and Colombia alone.
We are trying to level the global playing field. According to Michael Froman the U.S. Trade Ambassador, the average tariff in TPP countries is three to four times as high as ours is. It equates to 70% on autos, 50% on machinery, 35% on chemical and 50% on beef. A successful TPP agreement will either make these zero or much lower which in turn creates more economic opportunity for our U.S. cattle market. Let’s also not forget about China. There is no formal access for U.S. beef into China. If we care about American jobs and beef’s role in feeding a global population then we have to make progress on all of these fronts.