Regional Coverage
Exports have benefited from regional trade accords. But experts warn World Trade Congress audience that they cannot be used as trade barriers
by Ken Krizner, senior editor
The new world order seems to be tied together by regional accords. Within the past decade, 212 regional trade agreements between nations have either been initiated or approved. The most famous of these is the North American Free Trade Agreement.
Additionally, the World Trade Organization took affect on July 1, replacing the General Agreement on Tariffs and Trade. The WTO is the new arbiter of trade disputes.
Trade liberalization is in the air.
Meat processors and government officials representing 40 nations came to Denver in late May for the 10th World Meat Congress with a common interest: The continued liberalization of trade rules among nations of the world.
The congress gave more than 800 government and industry leaders an opportunity to discuss trade issues and developments from around the world.
Philip M. Seng, president of the U.S. Meat Export Federation, hoped that the event would spur U.S. red meat processors to appreciate the emphasis other nations place on exports.
He pointed out that Australia exports 64 percent of its beef production on a value basis, while the United States exports slightly more than 10 percent.
World meat trade is expected to grow at a 4 percent annual rate during the next 10 years, according to USDA. World meat production was at 172,057 metric tons (more than 399.3 million pounds) in 1993, USMEF figures indicate.
While the United States has seen a 360 percent increase in red meat exports between 1981 and 1994 (from about $700 million to $3.41 billion), Seng said red meat processors are just scratching the surface.
And any move toward protectionist policies by world governments would likely impede the United States, or any nation, from realizing the full fruits of exporting.
"The only way [our] $125 billion meat and livestock industry will grow and remain profitable is with a strong export program," Seng said. "The country's focus and orientation is still domestic. As a result, we haven't begun to reach the potential these new markets offer."
The world is regional
Regional accords have certainly helped meat processors from around the world.
Advocates of free trade warned processors, however, that regional trade accords can also be used as trade barriers against non-participating countries.
"The world is becoming more regionalized, at least as far as trade," noted John Kerin, chairman of the Australian Meat & Live-stock Corp. "The objective has to be to prevent these accords from becoming artificial trade barriers."
Regional trade accords became popular in the late 1980s and early '90s when it appeared that negotiations on the Uruguay Round of GATT were stalled.
"At one point, GATT looked dead, so countries began to negotiate among themselves," Kerin said. "And despite the fact that GATT has been implemented, regional trade accords will continue to proliferate."
Experts say future developments in regional trade accords will include:
-- Inviting Chili into two regional accords-NAFTA and an accord between Australia and New Zealand.
-- NAFTA encompassing the entire Western Hemisphere within a decade.
-- A regional trade accord among the nations of Eastern Europe, and the same for nations of the former Soviet Union.
-- Continuing expansion of the Asian Pacific Economic Cooperative, as well as developing mini-trade accords within APEC.
-- Continuing growth of Mercosur-a regional accord between Argentina, Brazil, Paraguay and Uruguay. More than 181 million people live in these nations, and their beef production is of high quality and enjoys an excellent reputation in world markets.
"Regional trade agreements can only improve trade," stressed Booth Gardner, U.S. ambassador to GATT. "U.S. meat exporters would benefit from an open market in Asia. An enlarged NAFTA could bring some competition into the United States, but we have learned from the current NAFTA agreement that our agricultural production is often complimentary to that of our neighboring countries, and that two-way trade flows can benefit both sides."
Gardner believes U.S. meat processors have an enormous future in exporting their products.
"There have been important increases in market access for beef and pork in recent years, and we should see some long run gains in exports to central and eastern Europe as those countries continue their economic recovery," he said.
But while everybody agrees that regional trade accords are vital, some speakers cautioned against them becoming too powerful.
"I would like to think trade blocs will be a thing of the past; that governments will make trade decisions they know are right, and scrap protectionism and intervention," noted David Frith, chairman of the New Zealand Meat Producers Board. "But these moves can be costly in political terms. Trade blocs will remain."
And while trade accords will remain and grow, USDA Secretary Dan Glickman cautioned that they "must not create international barriers for nations not in the accords."
Ralph Goodale, minister of agriculture for Agri-Food Canada, pointed to what regional accords have accomplished in the past decade.
"Tariff levels were high, non-tariff barriers were pervasive, and record levels of trade-distorting support were in place [10 years ago]," he said. "Domestic agricultural policy in almost every country was formulated in a vacuum-with little or no attention paid to the international impact of national policies.
"What a difference a decade makes," he added. "There appears to have been a sea-change. The tide is now running strongly in one direction: toward greater trade liberalization and the agreements necessary to bring such liberalization to life."
But Goodale also warned: "We cannot let up in our efforts, nor let down our guard. The temptation of unilateralism remains, bilateral battles can and do flare-up, and protectionism endures."
His point was echoed by former Secretary of State James Baker. He told the audience that governments must resist the urge of some to return to protectionist and isolationist policies that dominated world politics between World War I and World War II.
In the United States, he pointed to opponents of GATT and NAFTA as examples of "strong isolationist voices raging" in both American political parties.
"There needs to be a reaffirmation of liberalizing trade at a time when there are many ready to renew the battle between protectionism and free trade," Baker said. "Trade liberalization will only help further the cause of democracy throughout the world.
"It takes extra courage for politicians to take a stand for free trade and against domestic constituency," he added. "This is nowhere more true than in agriculture."
Red meat's trading future
Meat Marketing & Technology interviewed several speakers at the World Trade Congress to get their views on issues that surround the meat industry and trade.
MM&T: What will the Uruguay round of the General Agreement on Tariffs and Trade mean for the long-term prospect of U.S. red meat exports?
Booth Gardner, U.S. ambassador to GATT: It might not immediately have a dramatic effect, but it will lead to progressive expansion of trade around the world, as well as a more predictable trading environment.
It will help consolidate access gains in such markets as Japan and South Korea, and will help assure that new barriers cannot be erected. The sanitary and phyto-sanitary agreements will help us defend ourselves against unjustifiable sanitary barriers.
And GATT will also substantially reduce market distortions because of government subsidies.
MM&T: Will government subsidies be eliminated?
Gardner: All non-tariff barriers such as import quotas have been abolished, and the new rounds of negotiations will concentrate on tariff reductions. It is a good bet that export subsidies can be eliminated in the not-so-distant future.
MM&T: Mexico has become one of the most important export markets for U.S. meat. But beef imports will drop between 25 percent and 30 percent this year because of the peso devaluation. In light of its financial crisis earlier this year, what are the long-term prospects for exports to Mexico?
Luis F. de la Calle of the Mexican embassy to the United States: The prospects are very good. We can diversify our economy and we can export ourselves. Our ability to import is a function of our capacity to export.
The improvements in the Mexican economy instituted in the past 10 years remain, and the process of modernization continues. We are putting important reforms in place in areas of deregulation, infrastructure development, training our farmers, support for technological improvements and access to capital.
MM&T: Mercosur [comprising Brazil, Paraguay, Uruguay and Argentina] will be a trading bloc of more than 200 million people. What will be some of the variables to determine trade with Mercosur?
Roberto Vazquez Platero, former Uruguay minister of agriculture: Increases in productivity and overall production will take place as a consequence of new macro-economic policies that tend to eliminate bias against agriculture and agricultural exports.
The new sanitary status of the region-particularly foot and mouth disease-will become a major factor. Uruguay was declared "free with vaccination" in 1993, and Argentina will be the same sometime this year. Brazil and Paraguay are also making progress in the eradication of foot and mouth disease.