by Ken Krizner, managing editor
In September 1986, Ronald Reagan was president, Bill Clinton was a little-known governor from Arkansas and negotiations on the Uruguay Round of the General Agreement on Tariffs and Trade began.
Two presidents and more than seven years of skepticism, pessimism, cynicism and excruciating negotiations later, delegates from 117 nations approved a GATT accord that will open international markets beginning in July 1995. Congressional approval is expected by summer.
The pact will end tariffs in many industries and prevent "dumping" of goods at unfair low prices.
For agriculture, GATT means restraint of farm subsidy wars, lower food prices for consumers in protected nations, better market opportunities for efficient producers and special treatment for developing countries.
President Clinton said GATT meets "the test of a good agreement."
USDA Secretary Mike Espy disagreed slightly with his boss. "It's much more than good; it's great," he said.
U.S. agriculture earns an annual trade surplus of $18 billion to $20 billion, with 20 percent of farm production exported.
But under GATT, Espy said he expects world income could grow to more than $5 trillion in the next decade, pushing up demand for agricultural products, including meat. By giving American farmers more access to foreign markets, he said he believes GATT will be a boon to U.S. jobs.
Pork appears to be the big winner in GATT, while opinions are more guarded for beef. But Philip M. Seng, president of the U.S. Meat Export Federation, predicted that beef exports will reach $5.8 billion, and pork exports will reach $1.8 billion both by 2001. Combined, U.S. beef and pork exports totaled slightly more than $3 billion in 1992.
Pork prices more competitive
Seng said U.S. pork prices will be more competitive in Europe and Japan because of GATT. U.S. pork exports in these two markets have been hampered in the past by systems that substantially raise the cost of imported pork, according to Seng.
Japan, the largest importer of U.S. pork, agreed to reduce its gate price on pork imports by 29 percent through the end of the decade.
The European Community will replace its import system for pork with an import quota of 75,000 metric tons. Pork imports under this quota will have a tariff of 4 to 5.5 percent, depending on the cut. U.S. pork exports to the EC totaled 8,600 metric tons, valued at $7 million in 1992.
South Korea agreed to liberalize its pork import market in two ways. Chilled pork imports will be fully liberalized this year, with a tariff of 37 percent. The tariff will decline to 25 percent over a 10-year period. The market for frozen and processed pork imports, currently closed, will be fully liberalized by 1997.
"[GATT] gives us more freedom to exercise the competitive advantage that U.S. farmers have as the lowest-cost producers of pork in the world," said Karl Johnson, National Pork Producers Council president.
Beef wins some, loses some
One positive aspect was Japan, which agreed to lower its current duties on imported beef during the next six years to 38.5 percent. Seng noted that under the access provisions of GATT, the Japanese were not obligated to lower their duties below the current 50-percent level.
But Seng said U.S. beef did not come out a winner in South Korea where GATT gives the nation until 2000 to fully liberalize its beef market. Negotiators for the two nations last year reaffirmed that South Korea would fully liberalize its beef market in 1997, but GATT makes that date moot.
South Korea agreed to increase its beef import quotas from 106,000 metric tons this year to 225,000 metric tons in 2000. Of this amount, U.S. suppliers will be able to sell U.S. products directly to South Korean buyers for 20 percent of the quota in 1994, rising to 70 percent in 2000, Seng said.
But GATT did not give the United States "meaningful access" for high-quality beef in Europe, Seng added. The current quota of 10,000 metric tons will remain in effect under the accord.
And the European ban on beef containing hormones remains.
However, GATT's sanitary agreement prohibits unjustified health-related regulations that restrict trade, requiring all such regulations be based strictly on science. An EC review several years ago indicated that science alone could not justify the ban. Meat executives said they expect to see the ban challenged in a new dispute settlement body called the Multilateral Trade Organization.
Roger Stuber, president of the National Cattlemen's Association, is taking a wait-and-see attitude. "We need to lay everything on the table, and take some time to analyze this information and weigh gains in market access with changes in our import levels," Stuber pointed out.
As Clinton said, not everyone got what they wanted. But optimism was prevalent after negotiations concluded. "GATT will usher in a new era of global trade that will benefit all nations," said AMI President J. Patrick Boyle.