By Dean Kleckner, President, American Farm Bureau Federation
The Seattle World Trade Organization ministerial conference represents a vital opportunity to revise the global trading system to reward the world's efficient and productive agricultural producers, says Dean Kleckner, president of the American Farm Bureau Federation (AFBF). The AFBF is the largest general farm organization in the United States. Kleckner regards the WTO ministerial meeting late this year as a critical moment for U.S. trading partners to liberalize their markets and eliminate trade-distorting practices. He urges expedited negotiations that would last no more than three years.
American farmers today truly live and function in a global economy. The price that wheat fetches at the local grain elevator is directly impacted by the global supply of and demand for wheat. The ability of a cattle rancher to sell his livestock for a profit depends, in part, on economic conditions in foreign countries. When customers of U.S. agricultural exports face economic and fiscal crisis and lose purchasing power, as has happened in Asia, Russia, and Brazil, agriculture is the first to feel the effect.
The ability of U.S. agriculture to gain and maintain a share of global markets depends on many factors, including strong trade agreements that are properly enforced and the ability of our negotiators to strike deals with America's trading partners to open up new markets for our exports.
The Need for New Markets
U.S. agriculture is reeling from low commodity prices. Given an abundant domestic supply and a stable U.S. population rate, expanding existing market access and opening new export markets for agriculture is more important than ever. If we do not do this, American agriculture's long-standing history of yearly trade surpluses will not continue.
Changes in domestic farm policy in recent years have placed increased emphasis on our need to export. When the U.S. Congress passed the 1996 Freedom to Farm Act, it phased out farm price supports, making U.S. agriculture more dependent on world markets. American farmers and ranchers produce an abundant supply of commodities, far in excess of domestic needs -- and their productivity continues to increase. Exports are agriculture's source of future growth in sales and income.
Global food demand is expanding rapidly, and more than 95 percent of the world's consumers live outside U.S. borders. Despite significant progress in opening markets, agriculture remains one of the most protected and subsidized sectors of the world economy. In addition, U.S. agricultural producers are placed at a competitive disadvantage by the growing number of regional trade agreements among our competitors.
The United States will host its first ever World Trade Organization (WTO) Ministerial Conference later this year in Seattle, Washington. This ministerial will serve as the kickoff for the new negotiations on agriculture and other sectors in the WTO. As the host country for this ministerial, the United States and its trade policies will be in the spotlight. We will press our trading partners to liberalize their markets and decouple their support programs as the United States did when it passed "Freedom to Farm."
What New Negotiations Should Accomplish
Given the economic turmoil being experienced in many important U.S. export markets, the launching of new negotiations to further open markets has never been more important.
The U.S. market is the most open economy in the world, as evidenced by the low tariffs on agricultural imports. Yet our farmers continue to face significant barriers to access for their products in most corners of the world. Our trading partners have erected unfair barriers to protect their producers. We need to level the playing field in the next round of agricultural trade talks to enable America's farmers and ranchers to reap the rewards of their productivity and high efficiency.
Negotiators in the upcoming round of WTO talks need to comprehensively address high tariffs, trade-distorting subsidies, and other restrictive trade practices. In addition, emerging issues such as biotechnology must be discussed, with an aim to facilitating trade in genetically modified products. Bioengineered products hold the key to feeding a growing global population on a declining amount of arable land.
The American Farm Bureau Federation supports a comprehensive round that will allow negotiations for all sectors to conclude simultaneously. We cannot allow the easy issues to be picked off while the difficult ones like agriculture linger. We support setting a three-year goal for the conclusion of the negotiations. The Uruguay Round took seven years to complete. U.S. farmers and ranchers cannot sit idly by while our competitors trade openly in our market but deny us access to their markets on equal terms.
A growing problem for U.S. agricultural exporters are nontariff barriers to trade, specifically sanitary and phytosanitary (SPS) standards. We are seeing an increasing number of SPS issues that lack scientific merit. The first task of our negotiators should be to press countries to make binding agreements to resolve SPS matters based on scientific principles.
Next, we must address the magnitude of export subsidies that distort trade in global markets. These subsidies should be eliminated. Doing so would send the strongest possible signal to world markets that trade in agriculture is truly liberalized.
U.S. agricultural exports face prohibitively high tariffs that block their access to foreign markets. We need our trading partners to reduce their tariffs to be as low as ours. In addition, all WTO member countries should strive to eliminate tariff barriers within specified time frames.
Several countries engage in monopolistic state trading practices that distort global trade and restrict market access. Disciplines for state trading operations should be instituted to facilitate the flow of agricultural commodities worldwide.
Several agricultural disputes have now been litigated before the WTO, and we have all witnessed the significant time commitment involved in these legal proceedings. WTO legal cases take at least three years to complete, which is far too long for our producers to wait for a resolution. We must make changes to the trading rules to shorten these procedures.
There is increasing talk of instituting labor and environmental provisions in the World Trade Organization. We cannot allow non-trade-related issues to hold U.S. exports hostage in an attempt to make countries reform their social practices. Doing so would harm export trade without achieving the social goals being sought.
The trade ministers who assemble in Seattle for the ministerial conference have a historic opportunity to revise the global trading system to reward the world's efficient and productive agricultural producers. They must seize this opportunity. The first step in liberalizing agricultural trade was taken during the Uruguay Round. Trade ministers and negotiators need to complete the process in the Seattle Round.
Economic Perspectives
USIA Electronic Journal, Vol. 4, No. 2, May 1999