Beef Magazine is part of the Global Exhibitions Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

U.S. Dithers, While Other Countries Forge FTAs

U.S. stands to lose a lot of competitive ground if it dithers on free-trade agreements that have already been signed but just need to be submitted by the White House to Congress.

Congress faces a busy agenda when it returns from its August recess, but few items can offer as much immediate benefit to the struggling U.S. economy as ratification of three pending free trade agreements (FTAs).

USDA estimates that approval of the Korea-U.S. Free Trade Agreement would boost total U.S. ag exports by $1.9 billion. Approval of the U.S.-Panama Trade Promotion Agreement and the U.S.-Colombia Trade Promotion Agreement would increase ag exports by $371 million and $46 million, respectively. Based on an estimated 8,400 jobs supported by every $1 billion in exports, these FTAs will help create nearly 20,000 sorely needed U.S. jobs.

“These FTAs need to be at the top of the Congressional priority list because of the number of jobs they will help create across the U.S.,” says Keith Miller, U.S. Meat Export Federation (USMEF) chairman, a farmer-stockman from Great Bend, KS. “U.S. beef exports are surging, but we still need to remove barriers so we can get more product moving overseas. One of the best ways to do that is to approve these FTAs.”

The Korea-U.S. FTA is projected to boost U.S. beef exports to more than $1 billion/year over the 15-year implementation period. The Panama and Colombia FTAs would add an estimated $35 million in beef exports over the next five years.

EU, Canada, Australia press ahead

In the time that these FTAs have languished awaiting Congressional approval, the European Union (EU) has implemented advantageous FTAs with Korea, Colombia and Peru. Canada also implemented an FTA with Colombia, and Australia, which is by far the biggest competitor to the U.S. in the Korean beef market, is said to be very close to finalizing an FTA with Korea that would provide a price advantage for Australian beef exports.

Korea’s duties on beef imports are currently 40%, but would fall to zero over a 15-year timetable under these trade agreements. So, the supplying country that is first to have its duties reduced will gain a price advantage that will last for many years.

“We need to stay ahead of our competition because if we don’t, our competitors are going to take away our market share,” Miller says. “The EU has already pulled ahead of us in Korea in terms of tariff reductions. But Australia is our primary competition in that market, and it is really pushing hard to get an agreement finalized with Korea as well.”

Through the first six months of 2011, Korea is one of the year’s fastest-growing markets for U.S. beef. Year-over-year exports to Korea are up 73% in volume to 192 million lbs., and 69% in value to $381 million. But while the Korea-U.S. FTA offers the largest opportunity for beef export growth, Miller says the agreements with Panama and Colombia are also very significant.

“Congress needs to approach those two agreements with the same urgency as Korea,” he says. “Opportunities for U.S. beef in Central and South America are rapidly increasing. There is a growing middle class in this region that is looking for the type of high-quality beef the U.S. offers, and Panama and Colombia can be major contributors to our success if we can start reducing tariffs and other trade barriers.”

Despite import duties as high as 30% in Panama and a whopping 80% in Colombia, U.S. beef has made initial inroads into these markets. Through June, year-over-year beef exports to Panama are up 36% in value to $2.2 million, while exports to Colombia have more than tripled to $1.9 million.

The FTA with Panama would immediately eliminate duties on Choice and Prime cuts and some offal items, while phasing out most other duties over 15 years. Meanwhile, the FTA with Colombia would open the market to an unlimited volume of duty-free Choice and Prime cuts while establishing a duty-free quota for variety meats and other muscle cuts.