Congress recently overwhelmingly passed the Australia Free Trade Agreement as the Bush administration proposed it. It will move on to the President for his final approval.
Because of the Trade Promotion Authority, Congress could only approve or disapprove this negotiated bilateral free trade agreement.
While the agreement might be a boon for different sectors of the economy, agriculture, dairy and beef, in particular, will absorb the brunt of this deal.
Australian farmers will be the beneficiaries of the deal. Because of their low input, pasture-based system of agriculture, this makes them one of the lowest cost of production countries in the world.
With the valuation of their currency to our dollar, Australia can sell more agricultural products to the United States for less money.
Let’s refresh the particulars of this agreement. Australia eases tariffs on 99 percent of manufactured goods (i.e. airplanes, autos, and medical equipment) while the United States lowers tariffs on agricultural products over a set time frame for each commodity.
Beef will eliminate over-quota duties over a time period of 18 years, then will be duty free while dairy maintains over-quota duties but anything under that quota will be duty free and increase in volume by 5 percent annually. It will also allow new U.S. access of European type cheeses, milk and cream.
The agreement maintains the tariffs and quota protections for the politically powerful U.S. sugar industry.
While the agreement was being negotiated and the sugar farmers were balking at increased access, one of its biggest proponents, Rep. Cal Dooley, a California Democrat, stated in a Reuters article, “We cannot allow one commodity that is unwilling to compete internationally to deny hundreds of manufacturers… from an opportunity to gain new market stare”.
In the article, he also accused dairy farmers of making “outlandish statements” exaggerating the negative impacts of the pact.
The mindset of free trade for the sake of free trade is just plain wrong. What is needed is fair trade!
When agriculture is used as a sacrificial lamb for the growth of the manufacturing industry, that is not fair trade and when agricultural trade forms a tier system, leaving dairy and beef to fend for themselves in this global economy and sugar goes unscathed, that is not fair trade.
The University of Wisconsin Extension in collaboration with the Wisconsin Milk Marketing Board and Wisconsin Farm Bureau Federation prepared a study measuring how dollars earned from sales of agricultural products multiply in the state economy.
Matt Joyce of the university was quoted, “The dairy industry is as diverse as the state’s topography, but the economic activity per cow is consistent at about $15,000 to $17,000.”
Now imagine what the Wisconsin dairy industry will be when this agreement is fully implemented in 18 years without any duties to protect us.
Will we dairymen be outsourced to lower cost of production countries just as those same manufactures who will benefit from this agreement have been doing?’