CPA letter to USDA re: BSE, Cattle and Trade

One of CPA's major concerns is that trade policy has trumped food and product safety.  We allow importation of food and manufactured goods that do not meet U.S. quality standards, because trade flows are deemed more important than safety.

In the animal health world, the U.S. historically banned imports of cattle, pigs and sheep from countries that have known cases of foot and mouth disease, blue tongue and Bovine Spongiform Encephalopathy (BSE or mad cow disease).

But when BSE was discovered in Canada, our U.S. Department of Agriculture decided that trade was more important than U.S. animal health. The multinational meatpackers successfully persuaded USDA to keep the border to Canada open, to a large degree.  The U.S. had three BSE cases starting in 2003, with cattle originating in Canada.  Other countries cut off our export sales, but we allowed Canada to ship cattle to us.  The U.S. beef and cattle market has suffered drastically because our borders are open to imports, but other doors are not open to our exports.

Thus, we are a major net importer of cattle and beef.

CPA agreed to sign on to a letter to the USDA protesting this policy.  R-CALF USA, a major U.S. cattle producer organization and CPA member, initiated the letter.  It is below the fold.

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Currency Facts: Hampering investment in U.S.

FAIR CURRENCY COALITION

"Fact of the Week" for November 10, 2009

MEDIA INQUIRIES:  Lloyd Wood, 202.452.0866, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
OTHER INQUIRIES: Charles Blum, 202.904.2475, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

How a persistently undervalued currency distorts investment flows and sends U.S. jobs offshore

A persistently undervalued currency affects investment as much as it does trade.  For example, China’s persistently undervalued currency encourages investment in China at the expense of investment in the United States. This has the direct result of sending American jobs offshore.

When a currency is undervalued, investors with dollars, euros, or other currencies, rent land and purchase equipment for less in that country than the same activities would cost in other countries that do not undervalue their currencies.  As a hypothetical, let’s say it would cost 4 billion RMB to build a steel mill in China.  At current exchange rates, this mill would cost an investor around $586 million dollars.  If the RMB were allowed to rise to its fair value on the open market, however, that same mill would cost approximately $900 million, an increase of more than $300 million. This savings is purely the result of the Chinese government maintaining the misalignment of currency. 

 
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CPA official comments for U.S. National Trade Estimate

 The Coalition for a Prosperous America filed official comments with the U.S. Trade Representatives office.  The 1974 Trade Act, as amended, requires the USTR to annually inventory the most important foreign barriers affecting U.S. exports.  This report is submitted to the President and Congress.

USTR has not, in the past or present, commented on the impact of foreign consumption taxes (VAT) or currency manipulation.  It seems the belief is that those are U.S. Treasury issues.  However, when USTR formally published a request for comment, CPA responded by placing the VAT and currency issues front and center.

The foreign VAT issue is quantifiably the biggest trade distorting practice we face.  Currency is likely second. 

CPA's comments are below.  The full 48 page submission is here.

 

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Re: Docket No. USTR-2009-0033

Dear USTR Trade Policy Staff Committee

The Coalition for a Prosperous America (CPA) appreciates the opportunity to provide input relating to significant barriers to the export of U.S. goods.  CPA represents the interests of 2.6 million Americans - through our association and company members - who make and grow things.

Your Request for Comment seeks information on trade barriers including:

  1. Import policies (e.g., tariffs and other import charges, quantitative restrictions, import licensing, and customs barriers);
  2. Export subsidies (e.g., export financing on preferential terms and agricultural export subsidies that displace U.S. exports in third country markets)
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