Making the U.S. more effective in exports
November 10, 2008
USMEF President and CEO Philip Seng was channeling legendary British statesman Sir Winston Churchill when he told USMEF’s annual Strategic Planning Conference attendees this week that his advice to the new Obama administration is: “No matter how beautiful the strategy, you should occasionally look at the results.”
Having seen the U.S. beef industry sustain an estimated $11.6 billion in losses due to markets closed to BSE since 2003 and the U.S. pork industry not able to benefit from potential free trade agreements, Seng told the more than 300 agriculture industry leaders gathered in Tucson, AZ, that the new administration should be prepared to try a new approach to improving trade relations with the United States’ key export markets, and not be afraid to change course if the desired results aren’t being achieved.
While both the U.S. beef and pork industries are having “gangbuster” years for exports in 2008, Seng sounded a note of caution for the coming months while the global economic freefall seeks its own level and markets regain some semblance of order.
He noted that with just eight months of export data tallied, U.S. pork exports already have set a 17th consecutive annual record in 2008. Through August, pork exports were up 71 percent in volume and 64 percent in value over 2007, and set a new single-month record with $452 million of pork exported in July alone.
U.S. beef has shared the headlines, racing 32 percent ahead of the 2007 pace in volume and 41 percent in value, and setting a new one-month industry record for exports in August with $416 million in products exported.
While celebrating those results, Seng stated that there will be a lull in the coming months, and that it is up to the industry to “create our own weather.”
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“Red meat exports are one of our avenues to prosperity,” Seng said. “While there are countries suffering from depressed economies and devalued currencies, people in Japan, for example, have $5.5 trillion in personal savings, and banks in Japan and China have $1.5 trillion and $1.9 trillion respectively in foreign currency balances. Our export industry could take a page from Willie Sutton who, when asked why he robbed banks, replied ‘Because that’s where the money is.’ The money is in these key export markets.”
To help the U.S. red meat export industry have a fair shot at these markets, Seng advised the new administration to consider several steps:
– Create a new sub-cabinet level position with responsibility for all trade-related issues. This new point person on trade would be responsible for driving the USDA’s export agenda through trade negotiations and export promotion programs, and for ensuring that domestic marketing standards meet the expectations of our export customers.
– Redefine the industry-government partnership. Seng noted that in the effort to reopen international markets following the BSE announcement, USDA could have benefited from closer consultation with its cooperators on the workability of various negotiating options.
– Try a new approach to funding export market development. Seng suggested that the agriculture export initiative would benefit from the introduction of a mechanism for collecting and administering funds that would be used solely for developing international markets. Agriculture export concerns would remit these funds to the USDA, which would allocate them in combination with USDA funds to the export industry groups based on each industry sector’s contribution to the value of agricultural exports and the agricultural trade balance.
– Ensure that political appointments are based on credentials. Many of the problems that the United States has encountered in reopening markets to U.S. exports, and in working with trade partners in general, can be directly attributed to the lack of international experience of political appointees. Seng emphasized that expertise, combined with a cultural sensitivity to the countries with which we are negotiating, would enhance the effectiveness of the U.S. negotiators.
Seng closed his address by stating that the United States could learn a valuable lesson by observing the EU and its use of “soft power.” He noted that he attended the recent 17th World Meat Congress in South Africa that also was attended by EU Commissioner for Agriculture and Rural Development Mariann Fischer Boel. He said that Boel personally greeted every attendee, dined with the group, and spoke with the members about the EU’s commitment to safe and ethical food production practices.
“Whether one agrees or disagrees with EU positions on agriculture trade, the attendees unanimously left with a positive and warm impression of Ms. Fischer Boel and a respect for the professionalism of the EU team,” said Seng. “The United States used to do this very effectively, and we need to rekindle the important art of diplomacy when we engage our trade partners.”