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Need to Lead

Written by Dennis Sun

Those in the cattle business realize just how important exports of beef are to the industry, as we all know that we are in a global market these days. The global market, at times, really adds dollars to the beef carcass, not so much from the prime cuts, but organ meats, short plates and other parts of the carcass that we usually turn our noses up at. Overseas they like those parts, which is all right. It puts dollars in our pockets.

Just as important, though, is finding markets for the prime cuts of beef worldwide. As the standard of living gets better worldwide, more and more people are looking for more diverse proteins to eat, and what better proteins for them than good, American beef? So now, how do we get our beef to them in the complicated, confusing world of international trade and tariffs?

There is a trade agreement slowly working its way through Congress that some members of the body like and some don’t. Some in the beef industry approve of the agreement, and others don’t. Imagine that? The TPP, or the Trans-Pacific Partnership, is a proposed free trade agreement between the U.S. and 11 other trading partners bordering the Pacific Ocean, including Australia, Brunei, Darussalam, Canada, Chile, Japan, Malaysia, New Zealand, Peru, Singapore and Vietnam. This trade deal will cover a wide range of goods, services, financial services, telecommunications and food safety information.

They say this trade agreement is the largest agreement the United States has ever entered into. It is even larger than the North American Free Trade Agreement (NAFTA). The countries involved in the TPP are responsible for 40 percent of the world’s Gross Domestic Product (GDP) of $88 trillion, 26 percent of the world’s trade and affect 793 million consumers.

Those in favor of TPP say it will boost U.S. exports by $123.5 billion, focusing on machinery, especially electrical, autos, plastics and agricultural industries. They claim TPP will add $223 billion a year the income of workers in all the countries, with $77 billion of that going to U.S. workers.

Those against TPP say most of the gains in incomes would go to workers making more than $88,000 a year because most trade agreements contribute to income inequality in high-wage countries by promoting cheaper goods from low-wage countries. They also say the TPP, regarding patents, would reduce the availability of cheaper generics making many drugs more expensive.

Getting back to beef, TPP would really help us export more beef to Japan, which is already our leading export market. Under current agreements with Japan, the Japanese tariff on U.S. beef is 38.5 percent, and the Japanese tariff on Australian beef is 28 percent. We figure that Australia’s advantage over us in Japan alone costs the U.S. beef industry around $300 million in lost beef sales to Japan in 2015. TPP would level the playing field in regards to beef.

Many think – and I agree with them – that if we don’t pass this agreement, China and India will step in and get their own trade agreement with the Pacific Rim countries. In these agreements, you never get all you want, but the U.S. needs to step up and show some leadership. Our Congressional delegation supports TPP, and we should, too.