C36—Lancaster Farming, Saturday, November 15,1980
America’s biggest farm customer speaks up
BRUSSELS, Belgium -
Despite frequent claims that
the European Economic
Community’s common
agricultural policy is a
threat to international trade,
the Community increases its
imports of US farm products
every year.
The nine-nation group is
by far the largest single
customer of the US farm
industry—taking more than
a quarter of the total $10.6
billion US agricultural ex
ports m 1978-79. In 1979-80, it
is estimated by the U.S.
Department of Agriculture
that U.S. farm exports to the
Community will rise to $3.5
billion out of total expected
US farm exports worth
$14.25 billion.
The major export items to
the EC Nine are grains and
soybean products and much
smaller quantities and
values of meat products,
poultry, and specialty foods.
Grain and soybeans go
primarily to the EC animal
production industry, with
imports of com from the
United States running at an
annual average of around 12
to 13 million tons.
Expansion in the EC dairy,
pig, and poultry industries
has been a major factor
leading to a rapid expansion
in the import of soybeans
and soy meal into the
Community. Imports of
soybeans and meal currently
total around 12 million tons a
year, compared with little
more than three million tons
at the beginning of the 1970’5.
Of the total $6.6 billion in
US farm goods purchased by
the Community m fiscal
1978, soybeans and other
oilseed products accounted
Trent Woods of Nashville, Tenn., has crafted more than 300 wood items as
a participant in the national 4-H wood science program, supported by Weyer
haeuser Company Foundation.
4-H’ers get
NASHVILLE - For Trent
Woods, a 17-year-old
Nashville, Term, high school
senior, crafting wood items
comes naturally. Among his
achievements are a glass
topped entomology curio
cabinet with four slide-out
cases and a large wallsized
bookcase with a lower
cabinet made of rough
sawed poplar, both from
original designs.
“I must have been bom
with a little sawdust in my
blood, because my father,
brother and grandfather are
all woodworking craft
smen,” says Woo<-' y has
crafted more
for $3 billion. Traditional
feed grains accounted for
$1.2 billion.
The other major items
bought from the United
States were animal products
($624 million), tobacco ($454
million), and fruit products
($174 nullum).
These figures dispute the
frequent claim that the CAP
has progressively locked out
imports of US agricultural
products from EC nations.
In the words of one
agricultural trade expert.
Dr. H. J. Kolshns, until
recently European director
of the US Feed Grains
Council, “The locking out
theory is a myth; the
Community’s agricultural
trade system is based upon
international trade with
Community preference, not
on external blockage.”
But what about the other
side of the story—EC
agricultural exports to the
United States? Here the
picture is not so rosy, at least
from the European point of
view. EC farm exports to the
United States—principally
wine, wine products, and
limited amounts of meat and
dairy products—have, after
remaining static m the
1970’5, actually declined
during the last five years
with a consequent worsening
of the US-EC agricultural
trade balance.
From a balance in favor of
the United States of $1.4
billion in 1968, the advantage
rose to more than $7 billion
in the late 1970’5. Although
probably 30 per cent of the
EC deficit was due to the
decline in the dollar’s value
against the European
currencies during this
Massey-Ferguson Limited
• » | -a reacted with great
creative with wood —ssj:. “s«
governments of Canada and
Ontario that they “are
prepared to guarantee the
capital risk of a portion of
the new equity investment’
in the company from the
private sector ‘ providing
various conditions are met
including a satisfactory
degree of co-operation from
existing lenders ’’
The company’s refinan
cing plan comprises a total
package of $7OO million
(Canadian) of preferred and
common shares Of this
total, $2OO Million is
proposed as common or
preferred shares, carrying a
government guarantee as to
items, most as a participant
in the 4-H wood science
program. He was one of sis
national winners m the
program last year.
As part of his desire to
preserve family heritage,
the youth reconstructed and
refinished an antique typeset
drawer and refimshed 16
pieces of furniture, and used
his woodworking skills to
help build a garage and a
26x30-foot woodworking shop
with a complete second
floor
4-H members in the wood
science program work on a
wide variety of creative
projects They tackle such
period, the balance still
increased substantially in
America's favor.
Not unnaturally, the path
of EC-US agricultural trade
has not been particularly
smooth over the last decade.
Rivalry for markets—both
their own and in third
countries—has been an
inevitable consequence of
the expansion m agricultural
trade that has resulted from
the application of modem
technology on both sides of
the Atlantic during the late
1960’s and the first half of the
1970’5.
A particular bone of
contention is what the
Community regards as the
massive concessions given
to the United States through
the trading arrangements
for oilseeds. These allow
annual unports of 12 million
tons of soybeans and meal to
enter the Community levy
free.
When the General
Agreement on Tariffs and
Trade was negotiated, the
Community agreed to no
customs duties on soybeans
and other oilseeds not
produced in any significant
quantity m the Community.
This “GATT binding” has
meant that US soybean
imports have been able to
enter the Community
unhampered by the heavy
import levies paid on other
feed grains such as com and
barley.
EC cereal growers in
creasingly complain that US
soybeans and meal are
imported not only for the
value of the protein they
contain, but also for the
carbohydrate content. The
relatively low price of US
learn-uy-aomg pi ejects as
building bird and dog
houses, making attractive
gifts from scraps of wood,
remodeling homes and
businesses and making
lumber from hardwoods
grown on the family farm
Members develop skills in
the selection and ap
propriate use of various
types of wood and wood
products, explore career
opportunities associated
with the manufacture and
utilization of forest
products, and develop an
awareness of the business
and economics of the forest
products industry
soybeans thus allows them to
displace substantial
quantities of EC cereal in
mixed animal feeds.
On the broader front, the
so-called “grandfather
clause” written into the
original GATT in 1945
which allows the United
States to control access to its
market for agricultural
products and to demand
compensation for any in
terference with access to
other GATT signatories’
markets—is a particular
thorn m the side of the EC
farm export industry.
This GATT clause and its
extensive use by the US
Government in the first half
of the 1970’s brought US-EC
agricultural tr>de relations
to an all-time low pou.t in the
middle of the decade.
The tattered state of the
relationship was typified by
an exasperated outburst
from then EC Agriculture
Comissioner Petrus Lar
dmois. In a speech to the US
National Soybean
Processors Association,
Lardinois said: “We have
the impression that America
is purposely treating
agricultural trade as a one
way flow. You preach free
trade when it comes to other
people’s internal markets,
but you practice rigid
protection at home. For us
Europeans, America has
become the most protected
farm market in the world.
Each tune our traders
discover some growth m an
American market, measures
are taken against them.’’
As an example, Lardinois
quoted US action on a major
EC export product—canned
bam. Pomtmg out that
Community exports to the
United States had been cut
by 30 per cent—from 104,000
tons to 72,000 tons—in the
1973-75 period, he argued
that this regression had been
entirely due to coun
tervailing import duties
levied by the US Govern
ment.
Since that tune there has
been intermittent sniping
from both sides. Most
recently, the Community
restricted imports of US
Canadians to guarantee
TORONTO, ONTARIO -
turkey-meat in retaliation
for US duties on cognac and
other EC food products.
There has been, however,
fundamental improvement
in US-EC agricultural trade
relations since 1976-
particularly since the
completion of the Tokyo
Round of multilateral trade
negotiations in the GATT in
1979. In return for what one
USDA expert calculates as
significant concessions on $4
billion worth of agricultural
trade among the 41 GATT
signatories with whom the
United States reached
agreement, the US Gover
nment gave concessions on
about $2.6 billion worth of
trade on the US market—
principally in animal
products and gram.
The bulk of these con
cessions were given to
developing countries, with
the Community gaming
limited improved access m
cheese, beef, and lamb. But
problems remain for both
sides of the transatlantic
partnership.
The continued increase m
US soybean deliveries to the
EC market are seen by a
large section of the Com
munity farm industry as a
major cause of the current
leyel of EC dairy surplus
now reaching, in raw milk
terms—2o percent of total
annual production.
The increasingly efficient
dairy sector is using com
pounds based mainly on soy
to boost its yields and thus
produce milk for which there
is no market. An influential
section of the farm lobby
argues that this increase in
production would be im
possible were it not for the
availability of cheap soy
meal.
This' lobby continually
argues that some form of
restriction must be imposed
on soy imports if the growth
of dairy production is to be
checked. Although the EC
authorities have steadfastly
stood against any con
ventional limitation of soya
imports—import levies,
quotas, or duties—
Agriculture Commissioner
Finn Gundelach told the
European Parliament that
Farm Business
News
F refinancing
a substantial portion, which
are to be purchased by an
investor or investors ac
ceptable to the govern
ments $l5O Million as
convertible preferred shares
tc be purchased by Canadian
Imperial Bank of Com
merce; and $350 Million as
an underwritten public issue
of convertible preferred
shares' guaranteed by the
company’s other lenders
Canadian Imperial Bank
of Commerce will undertake
to purchase any unsold
balance of the public issue
up to $l5O Million
The major participation of
the Canadian sector should
provide a strong incentive to
other lenders around the
he intends tct discuss with the
US Government some form
of “auto-limitation” of soya
deliveries to the European
market.
What the Community
would like to see is imports
kept to their present level so
as to limit the extent to
which dairy production can
be expanded.
US trade relations will of
course be complicated by
Community enlargement
during the 1980’s to mclude
Greece, Spain, and Portugal.
Spain is a substantial
importer of feed grains, and
although it is initially likely
to enjoy unport levy con
cessions on com imports
from the United States, there
will be increasing pressure
from gram producers in the
Community for Spam to ,
accept more grain imports -
from the Community itself.
This pressure is likely to
be intensified by the ex
pected growth in the Com
munity’s production of feed
wheat during the next 10
years.
The olive oil production of
the three new member states
is also going to produce
particular complications.
Recent estimates by the EC
Commission"suggest that EC
support of this market could
cost over $BOO million by the
late 1980’s.
In ah attempt to recoup
some of this cost, it has been
suggested by some members
of die Commission, but not
whole-heartedly accepted,
that a production tax be
imposed on all oil crushing
plants. Were such an idea to
be accepted, it would apply
to soy oil as much as torj
Community olive oil.
But the one certain thing is
that the Community’s
demand for animal products
is unlikely to diminish, and
probably will increase, as a
result of enlargement. The
extent to which this provides
opportunities for US and
other non-EC producers will
depend more on the political
atmosphere than on the
agriculture and food in
dustries themselves.
Reprinted with permission
of Europe magazine,
Copyright August 1980.
world to give their support to
enable this package to be
realized.
The conditions to the
governments’ guarantee are
expected to include company
undertakings with respect to
its Canadian operations and
some restructuring of the
company’s existing debt.
This refinancing plan
entails the infusion of $425
Million of new equity and the
conversion of $275 Million of
debt into equity
This action by the two
governments is a crucial
step which will allow thet
company to press ahead with
negotiations with its prin
cipal lenders and
prospective investors