Free trade activity heats up

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The deadline is ticking for approving legislation under the rules of the President's Trade Promotion Authority (TPA). Under current U.S. trade law, the Administration is required to notify Congress 90 days before it intends to sign an FTA. Because TPA is set to expire June 30, March 31 was the deadline for approval of FTAs or consideration of text revisions under TPA. Here's a summary of what happened in recent days and industry reactions on each.

South Korea
After heated debate over difficult issues, the U.S. and South Korea concluded FTA negotiations and notified Congress only minutes before the TPA deadline. The U.S. Trade Representative (USTR) called this FTA "the U.S.'s most commercially significant•since NAFTA," with some estimates it will add $20 billion to an already $70 billion trade relationship. Wheat exports to South Korea will become immediately duty-free under an agreement ratified as written. However, the agreement excludes such key U.S. agricultural commodities as beef and rice, so ratification appears problematic.

Secretary of Agriculture Mike Johanns: "While the agreement includes many beneficial provisions for U.S. agricultural products, I am confident in saying that it will not be ratified unless Korea opens its market to U.S. beef in accordance with science-based international guidelines."

American Soybean Association: The agreement offers immediate duty-free access to U.S. soybeans for crushing and to U.S. soybean meal. And for the first time, producers of U.S. food-grade soybeans would have access to the South Korean market outside of the import monopoly created by the Korean State Trading Enterprise. Tariffs on refined soybean oil would be eliminated over 5 years, and tariffs on crude soybean oil would be eliminated over 10 years.

National Cattlemen's Beef Association: NCBA is withholding support for the U.S.-South Korea FTA until commercially viable beef trade is occurring based on the internationally recognized guidelines established by the World Organization for Animal Health (OIE). "As soon as we see U.S. beef trade based upon OIE guidelines occurring between the United States and Korea, NCBA will support the U.S.-South Korea FTA and the market access terms negotiated in this agreement. If that does not occur, NCBA and our cattle producer-members will oppose this FTA," stated Gregg Doud, NCBA chief economist.

National Pork Producers Council: U.S. pork exports to South Korea will be on an equal footing with pork from other countries. "The Korean negotiators wanted to minimize the market access gains for U.S. pork," said NPPC President Jill Appell, "but the U.S. trade team came through for pork producers and delivered a fabulous deal that will eliminate duties on U.S. pork exports and generate hundreds of millions of dollars in new pork exports."

National Corn Growers Association: "Korea is one of the United States' larger corn markets and the U.S.-Korea FTA will create new export opportunities for bulk corn and coproducts", said Ken McCauley, NCGA president. "Korea is an extremely important market for corn's value-added products. While we are pleased the FTA will increase pork exports to Korea, NCGA shares the beef industry's concern that commercially viable trade must resume under internationally recognized guidelines established by the World Organization for Animal Health (OIE)." 

American Farm Bureau Federation: AFBF President Bob Stallman said, "We appreciate the efforts of the U.S. Trade Representative in advocating the interests of U.S. agriculture. Yet, we remain cautious on the final beef outcome and will closely monitor the actions of Korea and its regulatory process over the next 90 days."

Panama
The Administration notified Congress on March 30 it will sign a U.S.-Panama FTA. The USTR office concluded negotiations with Panama in December but, foreseeing debate, intentionally left open the text of the agreement to allow for addition of new language on labor and environment.

Colombia and Peru
The U.S.-Peru FTA, a signed agreement the Peruvian government ratified in June, is pending congressional approval. Once the Colombian government ratifies the signed U.S.-Colombia FTA, it still faces review and approval there by the Constitutional Court. Here at home, the USTR and the House Ways and Means Committee are working on acceptable labor provisions, the primary sticking point with this FTA, before considering approval.

Securing FTAs with Colombia and Peru is crucial for U.S. wheat. The agreements immediately eliminate import duties and USW expects removing the tariffs will encourage these two countries to purchase about $400 million of U.S. wheat annually, up from the current pace of about $200 million per year.