FTAs Mean Jobs for Struggling U.S. Economy
While three key U.S. free trade agreements (FTAs) are awaiting approval in Washington, the United States’ competitors in the red meat arena are moving ahead with their own FTAs to gain competitive advantages in important international markets.
At stake not only are advantageous tariff rates that will facilitate U.S. exports, but the jobs that go with those exports.
The United States has pending FTAs with South Korea, Panama and Colombia. The U.S. Department of Agriculture has estimated that approval of these three FTAs would boost total U.S. agricultural exports $1.9 billion, $371 million and $46 million, respectively. Based on an estimated 8,400 jobs supported by every $1 billion in exports, that amounts to nearly 20,000 jobs associated with those FTAs.
For the U.S. red meat industry alone, it’s projected that the U.S.-South Korea FTA would boost U.S. beef exports to more than $1 billion per year over the 15-year implementation period – up from $518 million in 2010. For pork, exports would more than double by 2016 to more than $400 million.
The benefits of the Colombia and Panama FTAs would add an estimated $25 million in pork exports by 2016 and about $35 million in beef exports.
While the U.S. awaits passage of the FTAs in Washington, the European Union (EU) has implemented advantageous trade agreements with South Korea, Colombia and Peru. At the same time, Canada has agreed on an FTA with Colombia, and Australia and Korea are said to be close to signing an FTA that will benefit Australian beef exports to Korea.
U.S. red meat exports are on a record pace through the first six months of 2011. Beef and pork exports are each projected to top $5 billion for the first time in history during 2011, barring any significant changes in market conditions.
“A critical factor in the United States’ ability to maintain the current pace of exports is ensuring a level playing field internationally,” said Philip Seng, USMEF president and CEO. “If our international competitors are able to gain significant market access and tariff advantages, that will put U.S. products in a very tough position.”
Seng noted that in South Korea, for example, duties on beef imports would be reduced from 40 percent to zero over 15 years while pork duties of 22.5 percent on chilled product and 25 percent on frozen would be phased out by 2016. Supplying countries whose duties are eliminated first gain a material benefit that could last for years.
“Our members have been outspoken to us that approving these free trade agreements is the highest priority for our industry,” said Seng. “Congress and the administration have the opportunity to act on these FTAs this fall to keep the U.S. competitive with the EU, Canada and other aggressive competitors.”
Background information on the economic benefits of the FTAs is attached here.