A few thoughts by John Nalivka: Trade and the Beef Industry
April 23, 2015
During 2014, U.S. beef exports totaled 2.6 billion pounds and were 6 times (459 percent) greater than during 2004 when the U.S. lost its export business after BSE was discovered in a cow in Washington in December 23, 2003.
Even more notable is the value of those beef exports which was nearly 12 times greater in 2014 than 2004. This data may be impressive, but even more noteworthy is that the value of last year's beef exports was 100 percent greater than it was in 2003, a year before we lost that export business. Furthermore, 2014 was not the banner year for beef exports in terms of volume. That year was 2011 when the U.S. shipped 2.8 billion pounds of beef to markets outside the U.S. Even though we exported 2 million lbs. less beef in 2014 than in 2011, the value of the 2014 shipments was 33 percent higher.
There is no doubt that trade is important to the U.S. beef industry and I emphasize trade, not just exports, but also imports. Trade is a two-way street. The U.S. Trade Representative is currently negotiating the Trans Pacific Partnership, a pact that includes 12 countries. At the same time, the U.S. Congress is debating Trade Promotion Authority or fast track authority for approving a trade agreement. Japan, Mexico, and Canada are included in the 12 countries and these three countries in 2014 purchased 57 percent of the U.S. beef exported.
While the TPP is negotiated, another important decision that will affect U.S. beef trade is also in play and that is the WTO decision expected on May 18th concerning the U.S. appeal regarding the Country of Origin Labeling (COOL) law. Since its creation in 2004, this law has changed numerous times as the U.S. has appealed to the WTO concerning COOL's non-compliance with international trade law. In the last complaint, Canada and Mexico have threatened the U.S. with retaliatory tariffs if the U.S. persists in violating world trade rules. Canada's list of retaliatory tariffs include cattle, hogs, beef, pork, cheese, apples, cherries, rice, prepared meals, and many more food items as well as non-food items including office furniture, and mattresses. No big deal? Canada buys 14 percent of the beef we export and that beef represented 16 percent of our total beef export value.
The politics are at play as if that were any big surprise, but fundamentally, both TPP and TPA will benefit the beef industry (actually, the U.S. red meat and poultry industries) across the entire supply chain.