By Ledyard King
Sen. Max Baucus, D-Mont., was instrumental in securing President Barack Obama's chief domestic goal: a sweeping health care law. Now the Montana Democrat is threatening to block a key Obama foreign policy priority: a trade agreement with South Korea that would be the largest since the North American Free Trade Agreement took effect nearly two decades ago.
Baucus' major beef is that the administration is dragging its feet on trade issues that hurt Montana's wheat farmers and ranchers. As chairman of the Senate Finance Committee, which must review all trade agreements, Baucus is in a position to cause problems for the president.
Specifically, Baucus said he doesn't want his committee to consider the South Korea agreement unless it's packaged with ones that are pending for Colombia and Panama, in part because he doesn't think he has the votes to pass the South Korea pact without the other two. He also is pushing U.S. trade officials to lean more heavily on the South Korean government to ease longstanding restrictions on U.S. beef imports over worries about mad cow disease.
South Korea closed its markets to U.S. beef in December 2003 because of mad cow concerns. At the time, the United States accounted for 70 percent of South Korean imports, or about $815 million in sales per year. Last year, after years of slowly reopening the limited market, U.S. beef sales to South Korea rose to $518 million, but still only accounted for about one-third of imports.
At a hearing Wednesday before the Finance Committee, Baucus pressed U.S. Trade Representative Ron Kirk about a promise Obama made to open up markets with Korea for U.S. beef.
"We did raise this issue with the Koreans," Kirk said. "We were not as successful as we would like to be in getting it addressed in the (agreement), but we have not and will not back off that commitment."
"I hope so," Baucus told Kirk, "because it's virtually a necessary condition for us to move forward."
Beef prices have been favorable for Montana ranchers recently, but increased access to the South Korean market is crucial for the long term, said Kim Baker, a Hot Springs rancher and president of the Montana Cattlemen's Association.
"Even though things look really good, we have to look to the future and to our export markets as well," she said.
Montana's wheat farmers, who exported about 80 percent of the 176 million bushels they harvested last year, are watching the trade debate with even greater interest. The majority of their wheat goes to Pacific Rim countries, but they're now looking to expand into -- or at least maintain footholds in -- Central and South America where other countries, notably Canada, are moving ahead with their own trade agreements.
They want approval of a trade agreement with Panama, and particularly Columbia, where the market for their products has been eroded quickly, said Lola Raska, executive vice president of Montana Grain Growers, which represents about 1,300 growers. Nearly three of every four bushels of wheat -- 73 percent -- that Columbia imported in 2008 came from the United States. That dropped to 43 percent last year, in part because of the emergence of other countries, such as Argentina, as major wheat suppliers, she said.
Raska, who accompanied Baucus on a recent trade mission to Colombia, said the U.S. market share is likely to keep dropping unless a trade agreement is adopted that would remove the tariffs and make the United States' commodity competitive with other countries'.
"The message we heard from (Colombian officials) is extreme frustration. They value the U.S. product. They see it as higher quality. But they're not going to wait forever, either. They say if this free-trade agreement doesn't pass in a year, we'll probably lose our entire market share," Raska said. "A lot of other countries can grow wheat, so they can import that product from other countries if the tariffs aren't an issue, as they are with the U.S."
And it's not just growers with a stake in the proposed agreement.
Tom Spika, president of Spika Welding & Manufacturing in Lewistown, said the free-trade agreement also would benefit his small but growing company, which exports aluminum platforms used by mechanics to inspect and work on airplanes. The company currently pays duties of 15 percent, which would be phased out over the next five years under the proposed Colombian trade agreement.
Spika, who also accompanied Baucus on the South American trip, said his annual sales could increase by $3 million -- and he could add about 25 more workers -- if the tariffs were eliminated, allowing his company to compete on a level field.
"We could double our production here, and that means quite a bit to a community like Lewistown," he said. "There's not a whole lot of jobs, especially better-paying jobs, that people have the opportunity to take advantage of."
At Wednesday's hearing, Kirk said the administration wants to move first on South Korea because it's ready to go. He told Baucus that he is encouraged by progress on the Colombian agreement, but said "serious outstanding issues" remain on worker rights and violence against labor leaders "that are important to this administration and the American public that we won't compromise on."
Baucus said that he thinks the agreement helps -- not hurts -- labor, but that it can do no good if it doesn't come before Congress.
"The time is here. The time has come. In fact, the time has passed to ratify the Colombian free-trade agreement. It has long passed," Baucus said. "We're losing market share hand over fist."