FTAA Views Are Pro and Con

May 24, 2001

Agriculture Secretary Ann Veneman says a comprehensive free trade agreement among the 34 democracies in the Western Hemisphere will provide U.S. agricultural producers and exporters greater access to 450 million consumers outside the North American Free Trade Agreement with $2 trillion in income. With rapidly increasing disposable incomes, these consumers "represent a strong demand for imported food products."

In testimony to the House Agriculture Committee, Veneman said the Free Trade Area of the Americas (FTAA), when completed in 2005, "has the potential to significantly expand trade which in turn expands overall economic growth, crates jobs and boosts consumer buying power." Preliminary USDA projects "suggest" that the agreement could expand U.S. agricultural exports to the hemisphere by more than $1.5 billion annually.

"U.S. gains would come primarily from more open markets for our grains sector, particularly for wheat and feed grain," she said. "We also should see growing exports of horticultural and processed products as the FTAA contributes to greater economic growth throughout Latin America."

Some of the countries that would be signatories to the pact are U.S. competitors. "However, U.S. agriculture cannot afford to stand on the sidelines in any trade negotiation in this hemisphere or elsewhere," said Veneman. "Our farmers are among the most efficient in the world and our agricultural sector is one of the most export dependent sectors of the U.S. economy."

The National Cattlemen's Beef Association (NCBA), however, does not support an expanded FTAA. NCBA President-elect and Cedar Rapids, IA, cattle rancher Wythe Willey, told the committee, "We have felt all along that problems with NAFTA should be resolved and markets should be allowed to come into equilibrium before additional countries were added to the mix. We believe that agricultural issues should be addressed in the context of comprehensive multi-lateral trade negotiations and we do not support including agriculture as a part of a regional FTAA agreement."

Willey said the United States became the largest beef exporter during 2000. However, the United States could export significantly more if other countries abide by the same rules as the U.S. beef markets. Currently, in other developed countries, as in the EU, the market is virtually closed to U.S. beef. Other markets, such as Japan and Korea, protect themselves by relatively high tariffs.

"Access to the U.S. beef market is already relatively unrestricted and there is a perception throughout the U.S. industry that we have granted more access than we have gained during past negotiations," Willey said. "NCBA will not support increased access to the US beef market until meaningful access and tariff reduction is achieved in other major beef importing countries."

Sugar industry representatives urged that the multilateral World Trade Organization (WTO) be used to address disciplines in sugar trade. Jack Roney, director of economics and policy analysis for the American Sugar Alliance, told members of the House Agriculture Committee, "Only a comprehensive approach will restore the world sugar price to a level that reflects the actual cost of producing sugar, and that means addressing the rampant market distortions governments employ in the only comprehensive forum available in trade negotiations today, the WTO agricultural negotiations now underway in Geneva."

Roney said that since 1986, the U.S. sugar industry has endorsed the goal of "genuine, multilateral free trade in sugar ... We are ready, willing, and able to compete with foreign farmers on a level playing field." He made a point of noting, however, "We cannot endorse free trade at any cost, nor do we endorse unilateral disarmament of U.S. agricultural policies. Progress toward free trade must be made on a fair, genuine and comprehensive basis."

Food industry representatives, however, said all commodities should be on the negotiating table, at least where market access is concerned.