The Bush administration's use of “fast track”/trade promotion authority has been “aggressive” and has helped the United States to secure more favorable trade agreements, says congressional staffer Hunt Shipman.
“This authority gives our trade negotiators great leverage to speak with authority on behalf of the United States,” the staff director for the Senate Agriculture, Nutrition and Forestry Committee told members of the Mississippi Agricultural Economics Association at their annual meeting at Mississippi State University.
Trade promotion authority, granted to the president in August 2002, requires the executive branch to consult with Congress and solicit advice as trade agreements are being negotiated; in return, Congress agrees not to amend legislation implementing the agreements and can only vote them up or down.
The United States, says Shipman, is on track to hit $61.5 billion in ag exports this year, an all-time high. Nearly 900,000 jobs are related to ag exports, he says, a large percentage in rural areas.
And despite BSE (mad cow disease), avian influenza in poultry, and other problems, indications point to “an even better year next year,” he says.
Although there has been criticism by some of the North American Free Trade Agreement, Shipman says since its implementation in 1994, U.S. agricultural exports to NAFTA countries have grown by 54 percent.
Operating under World Trade Organization rules “has not been without complications,” he says, “but it has brought great benefits to the liberalization of trade.”
A major advantage of the WTO is that it “affords a dispute resolution process. Had China not joined the WTO, we would not have the threat of doing to them what they do to us.”
Despite achievements in the trade arena, there is still much to be done to harmonize tariffs and increase opportunities for the United States to export its products, Shipman says.
“Bound tariffs for agricultural commodities around the world average about 62 percent; some are in excess of 100 percent. For the United States, it's 12 percent.”
In negotiating trade agreements with other countries, “they have a lot more to give up to get to where we are,” he says. “We don't have a lot left to give up.”
Many people question the value of bilateral trade agreements, Shipman says, “but when we look at new and pending partners, we see a potential $4.7 billion in export opportunities.”
Trade agreements “give us new tools to compete in markets where we can't compete now.”
While China is a powerhouse in world markets, he says, “our exports to China grew 140 percent in the period 2000-02.” U.S. soybeans, he says, “bring home more money from China than sales of U.S. airplanes.” Acknowledging that trade with China “has not been without problems,” Shipman says “now that they're in the WTO we have a dispute resolution process to work out those problems.”
Referring to his participation in a delegation to China, Vietnam, and Thailand, Shipman says what was most noticed was the huge availability of extremely low cost labor.
“At their aquaculture operations, we saw no tractors, no feed wagons, no bulk bins. Everything was done by hand by people earning $2 a day. Our ability to compete with China is not going to lie with beating them in labor costs.”
Discussing Brazil's WTO complaint about the U.S. cotton program, Shipman says “there are some in Congress gunning for the cotton program” regardless of the WTO decision.
He cautioned, “Don't be hung up on the Brazil case. It's going to take time to resolve, and other things are taking place that could affect the cotton program — the budget process, for one.”