By MEGGIE I. FOSTER
Associate Editor WASHINGTON, D.C. — Despite three foreign trade agreements (FTAs) in limbo on Capitol Hill, officials with the New Zealand Embassy hope to shed light on a new agreement with the United States that would expand agricultural trade opportunities in the Asia-Pacific region of the world.
“The Trans-Pacific Partnership has become the single most important regional trade negotiation and the platform for economic integration in the world’s most dynamic region,” said U.S. Trade Rep. Ambassador Ron Kirk.
Officials with the New Zealand Embassy met with 55 members of the Indiana Farm Bureau in Washington, D.C., on March 9 to discuss opportunities within the Trans-Pacific Partnership (TPP) for U.S. farmers.
According to Ben King, of the New Zealand Embassy in Washington, D.C., the TPP would provide the United States with an immediate footprint in Asia, create new export opportunities for U.S. farmers, create an opportunity to shape future trade with Asia-Pacific, establish new rules to reflect 21st century business norms, contribute to President Obama’s goal of doubling exports during the next five years and reverse the U.S.’ declining share of trade in Asia.
King also mentioned that the TPP is a “high-quality, WTO (World Trade Organization) consistent agreement, with an open accession clause, and it is a regional building block. We see this as a real positive opportunity for U.S. farmers. We want the United States to be involved.”
The United States is a key economic partner and a major source of investment and tourism,” said King, adding that New Zealand is the U.S.’ third largest trading partner at $8.2 billion annually. “Until last year, the United States was our second biggest trading partner. Overall, there is growth in the U.S. exports to New Zealand, but a declining share of imports. We also see a consistent pattern for U.S. exports to Asia … we can do better.”
King went on to describe the U.S.’ declining share of trade in the Asia-Pacific region. The cause, he said, is that “the U.S. is being locked out of the region by a network of FTAs of which it is not a part.
These trends have intensified over the last four years.”
Currently, there are 175 FTAs in force that include Asian-Pacific countries, King added.
Additionally, there are 20 agreements awaiting implementation and 50 others being negotiated.
While three FTAs remain in limbo with Congress (U.S.-South Korea, U.S.-Panama, U.S.-Colombia), four U.S. negotiating rounds for the TPP took place in 2010 and five are scheduled for 2011.
Elimination of farm subsidies According to King, the Asia-Pacific region leads forecast growth in dairy consumption and since New Zealand is currently the No. 1 exporter of dairy products, they are positioned well within the Trans-Pacific Partnership.
“Around 85 percent of New Zealand’s agricultural produce is exported, we are the 12th largest agricultural exporter, by value; No. 1 sheep meat exporter; No. 1 dairy product exporter, though we only produce three percent of the world’s milk supply,” he explained.
With only 11,600 dairy farms across New Zealand, most dairies average 375 cows on about 320 acres, King added. Also, dairies in New Zealand are predominately pasture-based production systems leading to seasonal milk production that is supportive of changes in climatic conditions, King explained.
During the last 25 years, there have been significant changes to the agricultural economy in New Zealand that has led to growth in the pastoral-based agricultural systems across the country.
During the 1970s, the New Zealand (N.Z.) government offered a number of subsidies to assist farmers after the United Kingdom joined the European Economic Community. By the early 1980s government support provided many N.Z. farmers with up to 40 percent of their income to compensate for high input prices.
“By 1983, 60 percent of farm incomes were subsidies,” King said.
“In 1984, New Zealand was on the verge of bankruptcy.”
So that year, the New Zealand government made the decision to end all federal farm subsidies, and by 1990 the agricultural industry became the most deregulated sector in country.
“We provided exit packages to uneconomic farms, recovered costs of government inspections and moved advisory services to a ‘user pays’ basis and we reduced the size of the agricultural administration,” King said.
While a dramatic change at the time, King mentioned that the impact on the ag economy wasn’t as bad as originally forecast.
“We estimate that we lost 10 percent of our farms, land prices dropped but eventually recovered,” he said. “Productivity and economic growth actually increased, poor quality grazing land was converted to better uses in forest and vineyards … innovation became key to increasing income on the farm.”
Despite the unrest in the ag economy in the mid-1980s for New Zealand, today, the country is now “fully exposed to global market forces and operates as an efficient, market-oriented and highly-productive sector with the lowest producer support estimates in the OECD (Organization for Economic Cooperation and Development).
“We believe the change to remove our subsidy program has been a positive one,” concluded King. |
