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Commentary: Ag exports lead way in nation’s economic recovery

Issue Date: February 18, 2015
Michael Froman
Huge bags of California rice are loaded on a ship at the Port of Sacramento, destined to an overseas market.

(Editor's note: U.S. Trade Representative Michael Froman discussed prospects for improved agricultural trade in a speech to the National Association of State Departments of Agriculture earlier this month. Following are excerpts of his remarks.)

We know from experience that when American farmers are doing well, the rest of America is doing well. American agriculture creates positive ripple effects through the whole economy, value added at every step between farm and table.

This positive ripple effect is precisely why our record-setting ag exports have been such an important driver of our overall economic comeback. Since 2009, U.S. ag exports have increased roughly 40 percent. In 2013, exports hit nearly $150 billion, the record high. We're still waiting on the data for 2014, but we expect that those numbers will be even higher.

It's not just the "macro" figures, not just the GDP contribution, it's the kind of jobs these exports support. Ag exports supported over a million jobs. We know that on average, export-related jobs pay up to 18 percent more than non-export-related jobs.

We're working to lower barriers for U.S. exports so that more American businesses can export and those who are already exporting can export more. We're working to ensure that our trading partners set standards based on science, and that they do so transparently. We're working to make sure that our great made-in-America products aren't excluded from markets by policies designed to be protectionist.

That's why we're negotiating ambitious trade agreements like the Trans-Pacific Partnership, or TPP. TPP will lower barriers for U.S. exports to 11 markets in the world, some of the fastest-growing markets in the world.

In 2009, there were 525 million middle-class consumers in the Asia-Pacific region. That number is expected to grow to over 3 billion by the year 2030. Put differently, in just 15 years, two out of every three middle class consumers in the world will call the Asia-Pacific their home. And we know that the first thing that middle class consumers want is more protein, better nutrition and safer foods.

So to win in the future, we need to serve not only tables here at home, we need to get into the markets where 95 percent of the global consumers live, outside the United States. Right now, there are many barriers to that.

If you're an American poultry producer, you're facing import quotas in Canada, tariffs up to 12 percent in Japan and 40 percent in Vietnam. If you're an American tree nut producer, you're facing tariffs of up to 10 percent in Japan, 20 percent in Malaysia and 20 percent in Vietnam. Similar barriers can be seen from one product area to the next.

Meanwhile, competitors like Australia, New Zealand, Chile and others are able to sell their own agricultural products in key markets without facing the same barriers. For example, American ranchers face a 38.5 percent tariff on our beef exports to Japan, but ranchers from Australia will face a tariff that is only half of that.

The United States already sells $60 billion in agriculture products to TPP countries. Imagine how much more we'll sell when we can level that playing field.

In fact, today's playing field is so uneven, it means we're in a particularly good position to benefit from TPP. That's because our market is already broadly open. Our average applied agricultural tariff is only 5.3 percent, and we don't use regulations as a barrier to trade. By contrast, the average applied agricultural tariff is 8.9 percent in Malaysia, 16.2 percent in Vietnam and 19 percent in Japan.

At the same time we're working to conclude this agreement with the Asia-Pacific, we're also working on negotiations with the European Union: the Transatlantic Trade and Investment Partnership, or T-TIP. There, we're focused on knocking down tariff and non-tariff barriers that have prevented American producers from competing in that market. As we've made clear, we're not trying to force anyone to eat anything, but we do think decisions about what's safe should be made by science, not by politics. And we think a trademark and common names system which protects the right of European producers to sell over $1 billion of cheese and meat in the U.S. each year is a better place to start than a system that shuts U.S. producers out of Europe completely.

When TPP and T-TIP are concluded, the U.S. will be at the center of a web of agreements that will give us unfettered access to two-thirds of the global economy.

An important part of our push involves working with Congress to secure Trade Promotion Authority—to renew that, update it, make it relevant for the 21st century. To borrow from football, TPA is a playbook for putting the national interest above narrow special interests. It's how Congress helps define our negotiating objectives, how Congress determines how we work with them before and during negotiations, and how Congress sets out the process by which it will approve or disapprove an agreement when it's finally done and after it's been broadly and publicly debated.

Congress hasn't updated Trade Promotion Authority since 2002. It's time to update the playbook.

To bring home the best deals possible, we need your help in rallying that support. Trade agreements are how we can level the playing field for our workers, farmers and businesses, and protect America's competitiveness for the next generation.

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.

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