A Proclamation

There’s been a lot going on in the news lately.  With the killing of Osama bin Laden, the flooding of the Mississippi and the Governator’s troubles in California, you might understandably have missed a proclamation that came out of the White House last week.

In it, President Obama declared this week to be World Trade Week.

But for folks in agriculture, every week recently has been World Trade Week, as we wait for the final i to be dotted on a deal that would send three long-pending Free Trade Agreements to Congress for approval.

These FTAs, with South Korea, Panama and Colombia, have been languishing since 2006 and 2007.  We’ve lost a billion dollars in market share in South America, much of it in corn exports, as our friends and allies there make pacts with other countries because they’re tired of—and insulted by having to—wait for us to enact the agreements.

Colon Container Terminal, Panama (Photo courtesy Julie Root, RFD Radio)

Very few trades and even fewer political issues are considered win-win.  This, however, is one of them.  These countries are clamoring for our goods.  We’re clamoring for their markets.  Passing the FTAs would support 9,000 in America for every billion dollars in new exports.  The Korea FTA alone is expected to create about 70,000 jobs, according to the Obama Administration.  More than 22,000 of those jobs would be in agriculture. 

You can see why every week is World Trade Week for farmers and ranchers.  We’ve been working hard to get these FTAs passed.  As Illinois Farm Bureau President Philip Nelson recently wrote in an opinion piece to newspapers around the state, it’s like we’re in first place with 100 yards left in a marathon, and we’ve stopped to re-tie our shoes as our competition comes up from behind.  If we don’t get up and finish, we’re going to be overtaken and lose out.

And so, we have a proclamation of our own, since President Obama’s didn’t mention passage of the FTAs:

Whereas

• Free Trade Agreements with South Korea, Panama and Colombia were negotiated in 2006 and 2007, and have not yet been sent to Capitol Hill for approval;
• The U.S. has lost more than $400 million in corn exports to Colombia alone in the past two years;
• American heavy equipment manufacturers would finally be able to ship their products without excessive tariffs;
• And, whereas unemployment claims rose in three of four weeks from April to May;
• Now, therefore, the Illinois Farm Bureau, representing two out of every three Illinois farmers, does hereby proclaim that President Obama should immediately send, and that Congress should immediately pass, the Free Trade Agreements with South Korea, Panama and Colombia.  Doing so would benefit our economy and create jobs.  Doing so would be the perfect way to celebrate “World Trade Week.”

Dated the eighteenth of May, of the year two thousand eleven.

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I’ll Trade Ya

Back in school, when somebody else had something good for lunch, you might find yourself offering to swap something in your lunch for the good stuff in theirs.  “I’ll trade ya!” was a common refrain at the lunch table.  Of course, most times it was kids trying to trade carrots for cupcakes, but that didn’t stop them from trying.

The same principles apply in agriculture today.  The U.S. grows an abundance of good stuff that other countries want.  We ship corn, soybeans, wheat, cotton and other commodities overseas.  Agriculture, in fact, is the lone sector of the U.S. economy enjoying a trade surplus.

President Obama is currently visiting Latin America. He has indicated one of the goals of his trip is to increase trade. This is a positive step since analysis indicates 9,000 jobs are created or saved in the U.S. for every $1 billion dollars in trade. A delegation from Illinois Farm Bureau just returned from Panama and Colombia, and it came back with a simple recommendation: the President needs to send the Free Trade Agreements, already negotiated with these countries in 2006, to Congress for approval.

Illinois Farm Bureau Director Terry Pope at the Miraflores Locks on the Panama Canal

There are strong economic, geo-political and labor benefits resulting from the FTA’s. The U.S. has a transportation advantage to Panama and Colombia because of our extensive river network leading to the Mississippi and out into the Gulf of Mexico. They want our grain and heavy equipment. Illinois stands to gain significantly because corn is the largest ag import into Colombia and because of our heavy equipment manufacturers, such as Caterpillar, John Deere, CASE IH and Navistar. The trade is complimentary. Coffee, sugar, seafood and cut flowers are exported to the U.S.

However, Colombia has grown tired of waiting for the U.S. to approve the FTA. They have entered into trade agreements with other South American countries and as a result our corn market has fallen from $600 million in 2008 to $200 million in 2009. Colombian Ag Ministry advisor Andres Espinosa told the group “you are losing market share fast and will lose almost everything if you don’t approve the FTA.”

Making matters worse, Colombia and Panama have long been allies of the U.S. and officials feel betrayed by the fact the U.S. has not signed the agreement after five years.  Espinosa  said “the U.S. has been our most important friend and ally. I can’t believe this is happening.”

With an enemy dictator in neighboring Venezuela it is hard to understand why our government would not want to expand trade and business with our allies.  

In Bogota, citizens now feel safe to move about the city. The growth and development taking place in both countries is amazing. The FTA provides provisions to improve labor and human rights. Can we risk disappointing nations that consider us friends and turn down the jobs that will come with the expanded trade?

The President deserves accolades if he returns from Latin American with a serious intent to move these agreements forward. If not, it would appear his spring break trip was for pleasure and not business.

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To Trade or Not To Trade

International trade, in particular with South Korea and India, has been in the news as of late, in the wake of President Obama’s trip overseas.  It might leave some wondering why the issue is so important to the future of the U.S. economy.  After all, we keep hearing that the problem lies in domestic job creation, not international trade agreements.

Why are international trade agreements important?

It’s really a matter of math.  Only 5% of the world’s population lives in the U.S.—that means 95% of global consumers live outside our borders, and possess 75% of global purchasing power.  By 2025, population growth of 60 million is expected in the U.S. and 1.6 billion in the world.  That means even more consumers will be outside the U.S. in the future.

Why is this critical for agriculture?

Because agricultural production is already plentiful and efficient and we have the delivery system in place, and most of the world’s consumers are outside the U.S., it stands to reason that the ag sector is in prime position for exponential growth as world population grows.  Agriculture is the only sector of the American economy in which there is already a trade surplus.

The more we grow here and sell overseas, the more people we need to hire to do all of the growing, marketing, selling and shipping, and to work in all the associated support industries.  The Economic Research Service (ERS) says agricultural exports alone were responsible for 810,000 jobs in the U.S.  When you take into account the entire agri-food chain, 17% of the American workforce is already involved.

Why is it critical for the entire economy?

Can you imagine if agriculture—and the rest of the U.S. economy—had better and fairer access to foreign markets?  The pending Free Trade Agreement with South Korea alone could increase exports to South Korea by $1.6 billion, which, according to the U.S. Chamber of Commerce, translates into 200,000 new American jobs

Agriculture wouldn’t be the only beneficiary of increased trade.  Exports already support more than 10 million U.S. jobs.  27% of all manufacturing sector jobs are related to exports.  And U.S. jobs supported by exports pay 13-18% more than the national average.  All told, in 2009, the U.S. exported nearly $1.6 trillion-with-a-T in goods and services.  Illinois is the 6th largest merchandise exporter in the U.S—nearly 16,000 Illinois companies exported goods in 2007.

What could all those numbers look like with better access to overseas markets?  How many more jobs could we create?  How much more quickly would our economy be restored to full health?

There’s a lot of hard work ahead.  It will require leadership, responsiveness and accountability.  We in agriculture will do our part to help grow the job base, in addition to the crops in our fields.  But our elected officials need to help as well, by letting a little sunlight get through to foster some of that growth.

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