The Canadian Senate has given final approval to a free trade agreement (FTA) with Columbia, providing immediate market access for Canadian pork and pork products and placing the United States at a distinct trade disadvantage.
Back in late 2006, more than three and a half years ago, the United States and Columbia signed a free trade agreement. The Columbian Senate in 2007 voted to approve the agreement by a margin of 55-3 and the House by a margin of 85-10. The U.S. Congress, however, has not yet begun debate on the implementing legislation.
Iowa State University agricultural economist Dermot Hayes says the U.S.-Columbia FTA, when fully implemented, would raise U.S. live hog prices by $1.15/head. He says if the United States does not implement its FTA with Columbia, within 10 years the country will be completely shut out of the Columbian pork market because of Canada’s FTA tariff advantage.
“It is unfortunate that our producers have to pay the price for U.S. inaction on trade,” says Sam Carney, president of the National Pork Producers Council and a pork producer from Adair, IA. “Canada will gain the inside track on future export opportunities in the sizeable and growing Columbian market.
“The sad truth is that the hardest market to gain access to is the one that is lost to competitors. Business relationships between Canada and Columbia will become established, and when that happens, our only hope will be if we can offer a more competitively priced product,” Carney says. “But that will be virtually impossible if Columbian tariffs on Canadian products remain lower than ours for years to come.”
The U.S.-Columbia FTA is one of three that are pending approval by Congress. The FTA’s with South Korea and Panama have also been awaiting action for more than three years. Panama also recently finalized an FTA with Canada, and South Korea is nearing completion of a similar pact with the European Union, also placing these markets in jeopardy of being lost to competitors. The U.S. FTA with South Korea alone would add $10/head to the price of live hogs sold, Hayes says.
For years NPPC has been calling for approval of these three FTAs, pointing out the enormous danger of falling behind other countries. Now that the risk is becoming reality, it has become critical for the U.S. Congress to act quickly to at least level the playing field.