Remarks by Ambassador Michael Froman at the National Association of State Departments of Agriculture Winter Policy Conference
February 2, 2015
*As Prepared for Delivery*
“Thank you. Yesterday was quite a day for the Patriots – but we know who the real winners of Super Bowl Sunday were, and that’s America’s farmers.
“Because I’m told that nearly 46 million pounds of potato chips were sold in the run up to the game. And for those on the healthier side of things, sales of baby carrots were up 25 percent. Most impressive of all, Americans ate about 1.25 billion chicken wings. Laid end-to-end, that goes, well, a very long way.
“So, yesterday was a big day for American farmers. And we know from experience that when American farmers are doing well, the rest of America is doing well, as well. American agriculture creates positive ripple effects through the whole economy, value added at every step between farm and table. In 2012, for example, every dollar of agricultural exports stimulated another $1.27 in business activity elsewhere in the economy.
“This positive ripple effect is precisely why our record-setting ag exports have been such an important driver of our overall economic comeback. Since 2009, U.S. ag exports have increased roughly 40 percent. In 2013, which is the most recent year we’ve got full-year data for, exports hit nearly $150 billion, the record high, and we’re still waiting on the data for 2014, but we expect that those numbers will be even higher. Taking all these exports together, U.S. exports contributed one third of our overall recovery since 2009.
“It’s not just the macro figures, not just the GDP contribution, it’s the kind of jobs these exports support. In total, our exports supported 11.3 million jobs, an increase of 1.6 million jobs since 2009. And ag exports supported over a million jobs. We know that on average, export-related jobs pay up to 18 percent more than non-export related jobs. So we’re supporting more jobs, and these are good, high-paying jobs helping to increase wages for millions of Americans. At a time when so many Americans haven’t seen a bump in their paychecks in far too long, our trade policy has an important role to play in increasing wages and strengthening the middle class across the country.
“I’ve seen the benefits in real terms as I’ve traveled around the country.
“In Maxwell, Iowa, Rick Kimberley showed me how his family raises corn and soybeans on roughly 4,000 acres of land. Roughly half of all those soybeans grown and one out of every three rows of corn are destined for export, so trade has a critical role in keeping the Kimberley farm in family hands.
“In Melrose, Wisconsin, Congressman Kind and I met Byron Krueger, who has been farming since he was ten years old and runs a dairy operation that includes more than 400 cows. As Byron said, if we’re going to get good milk prices, we’ve got to increase our exports.
“Stories like this remind us that our record exports are helping real Americans. And even though there are over 300,000 American businesses that currently export, basically 90 percent of all American businesses don’t export, and we see huge potential in increasing those numbers.
“To unlock that opportunity, we’re working on multiple fronts. We’re working to lower barriers for U.S. exports so that more American businesses can export and those who are already exporting can export more. We’re working to ensure that our trading partners set standards based on science, and that they do so transparently. We’re working to make sure that our great Made-In-America products aren’t excluded from markets by policies designed to be protectionist.
“That’s why we’re negotiating ambitious trade agreements like the Trans-Pacific Partnership, or TPP. TPP will lower barriers for U.S. exports to 11 markets in the world, some of the fastest-growing markets in the world, all together representing 40 percent of the global economy.
“In 2009, there were 525 million middle-class consumers in the Asia Pacific region. That number is expected to grow to over 3 billion in by the year 2030. Put differently, in just 15 years, two out of every three middle class consumers in the world will call the Asia Pacific their home. And we know that the first thing that middle class consumers want is more protein, better nutrition, and safer foods.
“So to win in the future, we need to serve not only tables here at home, we need to get into the markets where 95 percent of the global consumers live outside the United States. Right now, there are many barriers to that.
“If you’re an American poultry producer, you’re facing import quotas in Canada, tariffs up to 12 percent in Japan and 40 percent in Vietnam. If you’re an American tree nut producer, you’re facing tariffs of up to 10 percent in Japan, 20 percent in Malaysia, and 20 percent in Vietnam. Similar barriers can be seen from one product area to the next.
“Meanwhile, competitors like Australia, New Zealand, Chile, and others are able to sell their own agricultural products in key markets without facing the same barriers. For example, right now, Australian ranchers face a 38.5 percent tariff on our beef exports to Japan, but ranchers from Australia will face a tariff that is only half of that. We know American producers are the most productive in the world, but we can’t expect them to win when the playing field isn’t level. The United States already sells $60 billion in agriculture products to TPP countries, and imagine how much more we’ll sell when we can level that playing field.
“In fact today’s playing field is so uneven, it means we’re in a particularly good position to benefit from TPP. That’s because our market is already broadly open. Our average applied agricultural tariff is only 5.3 percent and we don’t use regulations as a barrier to trade. By contrast, the average applied agricultural tariff is 8.9 percent in Malaysia, 16.2 percent in Vietnam, and 19 percent in Japan. As a result of that imbalance, our trade agreements disproportionately lower barriers to other markets and support good-paying jobs here in the United States.
“At the same time we’re working to conclude this agreement with the Asia-Pacific, we’re also working on our negotiations with the European Union, the Transatlantic Trade and Investment Partnership, or T-TIP. There, we’re focused on knocking down tariff and non-tariff barriers that have prevented American producers from competing in that market. Our goods exports to the EU have basically been flat for the last few years, and we need through T-TIP to find a way to enter that market. As we’ve made clear, we’re not trying to force anyone to eat anything, but we do think decisions about what’s safe should be made by science, not by politics. And we think a trademark and common names system which protects the right of European producers to sell over a billion dollars of cheese and meat in the U.S. each year is a better place to start than a system which shuts U.S. producers out of Europe completely.
“In parallel with T-TIP and TPP, we’re working to remove unnecessary regulatory barriers around the world. In 2013, this administration removed nearly 200 trade-related barriers affecting U.S. agricultural exports. This helped increase U.S. beef exports by 16 percent and U.S. pork exports to Colombia alone by more than 60 percent. And we’re continuing to make progress on all of these issues.
“We’re also standing up for American farmers and their families by strictly enforcing our trade rights. This administration has made enforcement a priority. Of the 18 complaints that we filed at the WTO since 2009, we have won every case that has been brought to conclusion. That includes cases against India and China for keeping out our poultry, and a case against Argentina for import licensing requirements.
“When TPP and T-TIP are concluded, the U.S. will be at the center of a web of agreements that will give us unfettered access to two-thirds of the global economy. And that makes the U.S. the production platform of choice. More businesses will want to move their operations to the U.S. to take advantage of our talented workforce, our abundant and affordable energy, our dependable legal system, and all the other things that make the U.S. market great. Farmers, ranchers, small businesses, and others will want to grow it here, raise it here, make it here, and sell it all around the world.
“As President Obama said recently, we’re now into the fourth quarter of his presidency, and as we saw last night, exciting things happen in the fourth quarter. With the contours of a final TPP agreement coming into focus and strong expressions of bipartisanship support for increasing “Made-in-America” exports, it’s looking like some of that excitement will be in the area of trade policy.
“An important part of our fourth-quarter push involves working with Congress to secure Trade Promotion Authority- to renew that, update it, make it relevant for the 21st century. Beginning with FDR and the New Deal Congress, Democrats and Republicans have worked together for decades to forge trade deals that support good jobs.
“To borrow from football, TPA is a playbook for putting the national interest above narrow special interests. It’s how Congress helps define our negotiating objectives, how Congress determines how we work with them before and during the negotiations, and how Congress sets out the process by which it will approve or disapprove an agreement when it’s finally done and after it’s been broadly and publicly debated.
“The fact is, Congress hasn’t updated Trade Promotion Authority since 2002, before the digital economy emerged as a major factor in global trade, before state-owned enterprises began to play the role they play in the global economy, and before there was a recognition that labor and environmental standards should be a major part of any trade agreement. It’s time to update the playbook.
“As we know, the fourth quarter is when the crowd matters the most as well. It’s when players depend on the energy of the crowd, and the support of its fans. To bring home the best deals possible, we need your help in rallying that support. NASDA, of course, has a federal policy focus, but you’re all plugged in at the grassroots and local organization level across the country, and you’re in a unique position to see the bigger picture and with boots on the ground to generate support.
“We need your help to get this done. We need you to remind farmers and ranchers in your states that trade agreements are how we can level the playing field for our workers, farmers, and businesses and protect America’s competitiveness for the next generation. We need you to remind them how important exports are to more good jobs here in the U.S. And equally important, we need you to encourage them to speak up, to tell their stories, so that people across the country understand how important trade is to farmers here at home.
“As Vince Lombardi, the famous coach and namesake of the Super Bowl trophy, once said, ‘People who work together will win.’ As we head into this fourth quarter, that seems like advice worth taking.
“We look forward to working with you to get this done.
“Thanks very much.”