U.S. gets tough with beef trade partners
By Cathy Roemer, Ag Weekly correspondent
July 4, 2006
TWIN FALLS, Idaho ~ Is free trade really free, and just how fair is it?
In recent U.S. beef trade tussles with South Korea and Japan, free trade seems to come with strings attached -- at best -- even though the World Trade Organization and free-trade agreements are supposed to be the great equalizers.
This time it’s not “where’s the beef” but “what’s in the beef” that had the U.S. Department of Agriculture laying down the law to South Korea in an “all or nothing” trade war.
South Korean trade officials visited 38 meat-processing plants in June in an effort to revitalize beef trade with the United States. The Asian country closed its borders to U.S. beef due to the Dec. 2003 discovery n and two subsequent cases -- of bovine spongiform encephalopathy in the U.S. cattle herd.
Out of the 38 plants, South Korean officials gave a thumbs down to seven facilities because Canadian cattle were not separated from U.S. cattle. Canada has had a higher incidence of BSE n five cases -- than the United States since BSE was discovered there in May 2003.
U.S. Department of Agriculture Secretary Mike Johanns said South Korea could not “pick and choose” which plants it will accept product from. The country can either take beef from all U.S. processing plants or none at all, he said.
Fred Stokes, president of the Organization for Competitive Markets questions Johanns position.
With a huge U.S. trade deficit, “what in the heck are we doing in restricting trade?” he asked.
In Japan’s case, beef trade negotiations have volleyed back and forth since the Asian nation closed its doors to American beef at the close of 2003 in response to that first U.S. case of BSE n discovered in a Washington State cow of Canadian origin. Japan recently began accepting beef products, then closed its borders again when a bone fragment was discovered in a shipment of U.S. beef .
Congress recently threatened sanctions to refuse certain Japanese products if Japan did not reconcile. The outcome was a trade agreement between the two nations, signed last week.
Although Johanns tough talk looks like a firm stand for U.S. beef , in reality he is following WTO rules that seek to “harmonize” commodity standards between nations.
That harmonization or “all or nothing” approach based on WTO sanitary/phytosanitary (SPS) equivalency rules leaves little room for individual free-market enterprise.
In the case of Creekstone Farms, a Kansas beef processing plant specializing in custom Angus beef products, the company sought to satisfy Japan by implementing on-site testing for BSE on all its cattle.
Kevin Pentz, senior vice president of operations, said the company invested nearly a half million dollars in testing facilities, but the USDA would not allow Creekstone to “individualize” its product. The company has since filed a lawsuit against the USDA.
This week, in transcript regarding Japanese officials’ visits to inspect U.S beef processing plants, Johanns was asked what if Japan did not approve conditions at various U.S. plants n would the whole market be shut down because of one plant?
“We faced that issue with Korea,” Johanns said. “The point is, we see our system as a whole system. This is not about individual pick and choose.”
If Japan rejected a plant, Johanns said it would be a “serious problem.”
“My hope is we don’t go that way again, any more than I would argue we should shut down their whole automobile market because we find a defective car,” he said.
In a written review of SPS policy, Lucinda Sikes, staff attorney for the Public Citizen, a consumer watchdog group, said SPS equivalency does more to “create strong incentives for downward harmonization to weaker standards” than raise the bar. While Sikes was speaking more about policy to protect American consumers, WTO rules apply to all member countries.
Sikes said international standards should not serve as “a floor curtailing innovative solutions to public health problems that are ahead of the international status quo.”
In light of “intense negotiations” between the United States and South Korea and Japan, the American Meat Institute, said in a press release, “It is important to remember that the role of the USDA is to certify the integrity of the U.S. system for export to various nations according to the terms of agreements.”
If countries are allowed to “pick and choose” who they want to do business with, it would “create a completely unworkable environment for international beef trade,” AMI stated.
“It would also create significant difficulty in our ability to negotiate free trade agreements that included SPS equivalency,” the organization added.
John Munsell, president of Montana Quality Foods and Processing, Mont., has a different point of view.
“Why do our USDA trade negotiators continue to shoot domestic producers and processors in the foot?” he asked. “Enterprising domestic meat plants, such as Creekstone Farms … have been summarily rejected by USDA which attempts to impose its all-or-nothing sales gimmick,” he said.
“Universal free trade agreements are being predicated on a common foundation … USDA is now suggesting that consumers must accept all product, regardless of its source, as being part of a universal all-or nothing seamless meat production environment in which individual noncompliant plants cannot be delisted,” Munsell said. “Try selling this concept to American meat-eaters.”
“America needs to earn the confidence of our foreign customers, not force their loyalty,” he said.
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