Trade Restrictions Cost Cattlemen $11 Billion in Lost Sales

By Sarah Young Livestock Editor
Thursday, November 6, 2008 2:34 PM CST

The International Trade Commission (ITC) released a report estimating that trade restrictions resulting from bovine spongiform encephalopathy (BSE) cost the cattle industry billions of dollars from 2004 to 2007.

Prior to the BSE incident in 2003, the United States was the leading exporter of U.S. beef. Although many markets opened the following year, several key export markets remained closed to U.S. product, most notably Japan and Korea.

The investigative report noted that BSE-related restrictions on exports have resulted in substantial losses to the U.S. beef industry, costing $1.5-2.7 billion in lost revenue annually. The annual export losses ranged from $3.1 billion in 2004 to $2.5 billion in 2007.

The National Cattlemen’s Beef Association (NCBA) has worked tirelessly to remove unwarranted restrictions and regain lost export markets since 2004, and contributed data, briefings, and testimony to the ITC for this report.

The report also concluded U.S. beef exports still face substantial impediments in the form of tariffs and tariff-rate quotas.

Even with BSE-related restrictions removed, exports would continue to face major tariff and tariff-rate quota restrictions. Exports would expect to increase $1.4-1.7 billion if global tariffs and tariff-rate quotas were removed. During 2004n07, potential gains in export sales from removing tariffs and TRQs were estimated to be $6.3 billion over the four-year period, substantially less than the losses in export sales associated with BSE-related restrictions.

“Opening markets and advocating for science-based standards of trade remain top priorities for NCBA,” explains Arizona cattle producer and NCBA President Andy Groseta. “This report confirms what cattle producers have known for years. It serves a critical purpose in helping everyone understand the size and scope of the economic losses our industry suffers as a result of unfair trade restrictions.”

Farm-gate sales of cattle and calves during the period between 2004 and 2007 were $195.5 billion, so the $11 billion in losses estimated by the ITC translates to 5.6 percent of cattle producers’ income. The report also estimated that tariffs and tariff-rate quota (TRQ) restrictions cost the industry another $6.3 billion from 2004 to 2007.

NCBA Chief Economist Gregg Doud praised the thoroughness of the report, saying, “This illustrates the many economic consequences resulting from global tariff and non-tariff trade barriers. Trade restrictions continue to hurt our industry, costing cattle producers considerable amounts in lost sales.” Doud continued, “I appreciate the foresight shown by Senator Max Baucus in commissioning this study. The analysis helps demonstrate why opening markets is so important.”

The report noted that BSE-related trade restrictions on U.S. beef are not based in science, saying, “As of May 2007, the United States has been recognized by the World Organization for Animal Health (OIE) as a controlled risk country with regard to BSE. However, certain countries…impose restrictions on U.S. beef that are more stringent than the OIE guidelines for a controlled risk country.”

The report also found greatest losses to the U.S. beef industry result from trade restrictions imposed by Japan and Korea.

These two countries accounted for 86 percent of the lost export sales caused by BSE related restrictions and of potential export gains if tariffs and tariff-rate quota were removed.

The imposition of restrictions on imported beef in response to food safety concerns can occur quickly; lifting these restrictions takes time the report says.

Typically, governments immediately close their borders when faced with concerns over the safety of food imports. However, once a market is closed, reopening can take months or even years. The U.S. BSE incident provides an example of this imbalance between imposing and relaxing trade restrictions.

Once the existence of BSE was confirmed in the United States, countries banned U.S. beef within days. More than four years after these restrictions were imposed, many of them continue, generally in a modified form, preventing less than full market access.

Comments »

Comment on this story

Comments will be approved within 48 hours

Name:

Email: (optional)

Comments:

Image Verification: (Case sensitive)