I enjoy a good steak or burger, but I don’t think about the beef trade a whole lot. I was reminded of it, however, when I saw Senator Max Baucus’ announcement last week that the United Arab Emirates is eliminating its ban on U.S. beef. The senator took appropriate credit, of course, and may have actually had something to do with it. It made me wonder where we stand on other countries’ beef restrictions.

Unfounded, unscientific restrictions on beef hurt hardworking ranchers in Montana and across the U.S. and create an unlevel playing field for U.S. beef. Simply put, American beef is 100 percent safe and the best in the world, and there is no reason for it to be banned on scientific grounds. The UAE’s decision to recognize sound science and lift its ban on U.S. beef means millions of dollars in new export opportunities for our ranchers.
- Senator Max Baucus

I recall the bad old days when Japanese negotiators kept their faces straight as they told us that American beef just couldn’t be digested by delicate Japanese stomachs – their justification for keeping U.S. steaks out of the market. The world has changed little since then, though Japan may loosen its restrictions later this year. We have heard that before. If it should happen, that’s bad news for our Australian friends who inherited the Japanese market when we were booted out over one stray Canadian dairy cow that crossed the border.

Who you calling "mad"?

The ITC did not catalog all the BSE-related restrictions in the world, but highlighted those of Japan, South Korea, the European Union, China, Russia and Mexico – all of whom exceeded the recommended restriction level established by the World Organization for Animal Health (OIE). Each had different sorts of restrictions. You can check them out in the ITC report. But are they still in place?

We have been pushing Japan to ease its BSE restrictions for several years, but to no avail so far. The current thinking is that Tokyo may relent later this year, but we have been led to believe that since at least 2009. I’m not holding my breath, though this could be a major boon to Hawaii’s cattle ranchers. The same holds true of South Korea, but here we seem to be well on the way to getting rid of the BSE trade restrictions since they were included in the U.S.-South Korea FTA. I’m not sure of the implementation schedule.

Europe‘s BSE restrictions have been hopelessly commingled with opposition to hormone-fed beef and genetically-modified beef, so it is nearly impossible to separate them out. In fact, Brussels seized on the presence of the one cow with BSE in 2003 to impose new restrictions on hormone-fed beef (hunh?). These restrictions have not been removed, though there is some hope. There is a new report to the European Parliament urging liberalized rules on beef imports from countries that have had BSE cases in the distant past, as well as a proposal that would expand U.S. sales of hormone-free beef in Europe.

China still bans U.S. beef outright, much to the joy of Australian ranchers who have enjoyed a near-monopoly in the Chinese market. Russia‘s restrictions appear to still be in place, though I have not been able to confirm this. There seems to be clear progress in Mexico. Mexican BSE restrictions remain in place, but their application to U.S. beef products has been progressively reduced to a smaller number of products. U.S. beef exports to Mexico topped $818 million in the first ten months of 2011, a 25% increase over the same period in 2010. Who says NAFTA wasn’t worth it?

Is this the reorg blueprint?

The report advises the Administration to consider:

Creating a Department of Business, Trade, and Technology by combining relevant agencies within the Department of Commerce with trade and business focused agencies and offices, including the Office of the United States Trade Representative, the Small Business Administration, the Export-Import Bank of the United States, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency.

Sound familiar? But that was more than a year ago. The report suggested that the President establish a commission to look at this and other proposals, but the White House took a quicker route, directing the Office of Management & Budget to look it over. President Obama clearly liked the idea, which he presented in last year’s State of the Union address. He gave OMB until August 2011 to tell him if it was feasible. I know because I was one of many people in and outside of government that OMB talked to about it. OMB met the White House’s deadline, but there it rested, apparently stillborn. Until a couple weeks ago when Obama sent up a trial balloon. The naysayers have reacted exactly as I would have predicted and none of the opposition can be a surprise to the White House.

So maybe we should think about the rest of the blueprint. Aware that Commerce is perhaps the most diverse (as in “unconnected”) department in government, the report urges the President to think about where the parts of Commerce not related to the new department (let’s call it DBTT) should belong. The authors suggest that the National Oceanic & Atmospheric Administration might be better suited to the Department of the Interior. They propose creation of a new independent U.S. Statistical Agency, which would include Commerce’s Economics & Statistics Administration, along with the Bureau of Economic Analysis and the Census Bureau.

The report suggests that the new DBTT might grow to encompass some of the job training and higher education programs of the Labor and Education departments, reinforcing its mission of improving American competitiveness. The new department might also grab off programs from Energy, Transportation and Housing that “promote science for economic development purposes”. This might also include part of the White House Office of Science & Technology Policy.

That is the broad blueprint. Arguments for and against each of its proposals are contained in the report, but it is clear that what the White House has in mind goes far beyond a “simple” reorganization of trade-related agencies. That is merely the low hanging fruit. Now we see if it can be picked.

Piecemeal dismemberment?

You might think this would be the Golden Age for the Commercial Service, with a President and Administration emphasizing the National Export Initiative to double U.S. exports. American politicians may disagree over imports, but almost all agree that exports are “a good thing”. And yet the Commercial Service gets slashed nearly every year. There are many reasons for this. CS gets caught up in the general hysteria about budgets, it is a small agency within the huge Commerce bureaucracy – which is itself under fire, and there are suspicions by some that Commercial Service programs constitute some form of “corporate welfare”. The latter, of course, ignore that most CS client companies are small businesses who provide jobs in local communities. There are those on Capitol Hill who assume that any company that exports must be in the Fortune 500, displaying a remarkable ignorance of the facts.

For some months, I have reported rumor and fact about plans to close Commercial Service offices. Washington has now confirmed some of these closures, at least for overseas offices. Six foreign operations have shut their doors in the past month: Florence, Italy; Caracas, Venezuela; Vancouver, Canada; Dakar, Senegal; Tijuana, Mexico; and Vladivostok, Russia. This adds to an earlier closure in Bern, Switzerland. More bad news is coming in 2012 when as many as nine more foreign posts will be closed. (Nagoya, Sapporo and Melbourne are on the rumor list.)

Commerce tries to put lipstick on all this, saying the obligatory things about modernizing and shifting resources. The fact remains that the budget situation in Washington is leading us to gradually destroy the most effective export assistance network on the planet.