Sunday, May 18, 2008

Obama on Trade

Trade is a hot button issue in this election and both Democratic candidates have blamed trade agreements for lost jobs in the US. If you are going to bash trade, at least get the facts right:

Speaking to a crowd of farmers in a barn, Barack Obama cited the Japanese not selling American beef as an example of how current trade policies have hurt rural communities.

“You can’t get American beef into Japan…even though we have the highest safety standards. They don’t want the competition,” he said in response to a question about trade and manufacturing jobs moving to China.

But Japan lifted its ban on American beef almost a year ago in June. The country had banned imports in 2003 after an outbreak of mad-cow disease. According to the U.S. Meat Export Federation in Denver, the U.S. currently exports over 5,000 tons of beef per month to Japan, down from 20,000 tones before the 2003 ban when Japan was the No. 1 importer of American beef.

But the problem is not, as Obama said, that the Japanese refuse to import American beef. Rather, it is that American beef now faces stiffer competition with Australian beef, which is cheaper and has made major inroads in the market in recent years.

“The market itself has changed,” Shirou Inukai, deputy director of the Meat Market and Trade Policy Division of Japan’s agriculture bureau said in an interview with the Wall Street Journal in August. “When American beef was gone, Australian beef filled the void.”

Adding to the problem, the overall demand for beef in Japan has been slowing. During the economic heyday of the late 1980s and early 1990s, consumers lusted for fat rib-eye and juicy filet mignon, which were about half the price of costly Japanese beef. But lately, the Japanese have been opting for fish, chicken and pork. Per capita consumption of beef in Japan is down 13% from 2002, according to Japan’s agriculture bureau. Even domestic beef has taken a hit.

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