You don’t own any cattle, so the court-clouded Canadian beef import rule doesn’t affect you, right?
Likewise, you don’t make fructose, raise sugar beets or grow cotton so all that mumbo-jumbo about NAFTA, CAFTA, TRIPS and the WTO is better left to those smart trade-talkers in Washington, Brussels and Geneva. They know where they’re going, right?
Well, no; they don’t know where they’re going.
A map of this around-the-world free trade ideal doesn’t exist. Those smart trade talkers are making it up as they go.
And where they’re going right now is through U.S. farm and ag export policy.
Later, they’ll be going through your barn, then your house.
New path. This new path was charted March 3 – a day after UDSA was sent home for making hamburger out of the Canadian cattle import rule – when the World Trade Organization (WTO) condemned U.S. cotton subsidies as trade distorting.
But this ruling, brought to you courtesy of another failed U.S. appeal to the WTO over Brazil, went way beyond cotton.
This time the WTO said that most, if not all, U.S. government-supported ag export programs are trade distorting.
In simple terms, this means some big swords used by USDA to facilitate American ag sales abroad may soon be melted into plowshares by the WTO.
GSM 102 and 103. The largest and sharpest of these are USDA’s Export Credit Guarantee Program, commonly referred to as GSM-102, and its longer partner, the Intermediate Export Credit Guarantee Program, or GSM-103.
Together, 102 and 103 are solid gold American promises that backstop credit offered by U.S. exporters to sell American ag products overseas.
GSM-102 is short term, 90 days to three years; GSM-103 credit is three to 10 years.
It’s big bucks. Since fiscal year 2000, foreign food sales financed by 102 credit have averaged $2.86 billion per year.
All total, GSM-102 credit has moved $14.3 billion of your products into more than 20 countries since fiscal year 2000. GSM-103 is smaller; it has guaranteed $825 million of credit for U.S. ag products sold overseas since fiscal year 2000.
Credit guarantee. Another U.S. commercial export credit program in the WTO’s crosshairs is the Supplier Credit Guarantee Program.
It is designed, according to USDA, “to encourage U.S. exporters to expand, maintain, or develop markets for U.S. agricultural products where commercial financing may not be available without a (Commodity Credit Corporation) payment guarantee.”
Since fiscal 2000, Supplier Credit Guarantee Program has been used by exporters to underwrite $2.3 billion in U.S. food sales abroad.
In fiscal 2004 alone, the program was used to finance $790 million of American ag exports to 12 foreign countries.
Numbers. Add it up. Since 2000, the two GSMs and one Supplier Credit Guarantee Program have provided $17.4 billion in trade-enhancing credit.
It could have been more.
The 2002 farm bill annually gives USDA a $5.5 billion credit card for the programs.
But what Congress gives, the WTO can take.
That’s the funny thing about free agricultural trade; your nationally important program may be internationally illegal.
Hello free ag trade, goodbye American ag export credit. Free trade is, after all, a two-lane highway. Goods traveling both directions must follow the same highway signs.
Signs. And the signs must be obeyed even if U.S. farmers get only $900 million in additional exports (a wildly optimistic USDA estimate) under the new Central America Free Trade Agreement (CAFTA) while those nations get access to the $11 trillion U.S. market
In fact, these signs – the WTO’s newest is plain: No Export Credit Zone Ahead – are beginning to catch the eye of Congress.
Off the map? On March 23, Senate Ag Chairman Saxby Chambliss, R-Ga., announced that “as (CAFTA) currently stands, I will vote against the agreement when it comes to the floor” because its “long-term impacts … may alter certain U.S. farm programs.”
May? No, it will.
If CAFTA is the map for future trade deals, Chambliss is warning, U.S. farmers are headed off the map.
Or as plainspoken Louisiana Ag Commissioner Bob Odom recently related in a interview, “If you keep giving away a third here and a third there in trade deals, pretty soon you ain’t got any third left for yourself.”
(Alan Guebert’s Farm and Food File is published weekly in more than 75 newspapers in North America. He can be contacted at firstname.lastname@example.org.)
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