The prevailing economic wisdom is free trade is good. But like a free lunch, it's not really free. It's just a matter of who pays.
For years Mexico has captured thousands of American jobs. Many companies, encouraged by the North American Free Trade Agreement, relocated south of the border. All sorts of goods were created at a fraction of the U.S. labor cost and minimal regulatory fuss. But, now Mexico's President Vicente Fox is pushing for talks to delay the scheduled NAFTA rollback of tariffs that have kept Mexico farm produce competitive with American imports.
Mexico is not the only developing country that views more trade as potentially damaging to the development of its domestic industry. Another case in point is the Russian Republic. There, officials seem intent on protecting an emerging Russian agricultural sector.
In 2001, the Russians purchased 1.1 million tons of chicken legs and hindquarters for a fee of about $240 million. Chicken hindquarters account for half of the total chicken production in the U-S and Russia imports 50 percent of all U-S hindquarters. The result is one-fourth of all U-S chicken production being directly dependant on Russian sales.
Early last year, Russian officials placed an import ban on U.S. poultry citing cleanliness issues. U.S. chicken industry officials responded with the accusation that it was just an unfair trade practice and not a health issue. By mid-year, American poultry producers began to suffer from the glut of chicken originally slated for export to the former Soviet state. The embargo had further impact by rippling back through all parts of the meat sector including pork and beef.
After recently reopening its borders to the U.S. chicken industry, Russia now appears to be planning yet another import quota on poultry, beef and pork products set to be implemented sometime in April.
For their part, chicken industry officials are concerned that the quota will once again leave U.S. producers holding the bag. The same poultry advocacy groups also are concerned the higher priced Russian product may be out of reach for some citizens already on the edge of poverty.
Officials at the National Chicken Council are hopeful the U.S. Trade Representative will remind Russia that if it wants to join the WTO it will need to liberalize its trade practices. Meanwhile, the nation's largest chicken processor Tyson, though not pleased with the possibility of a quota being put in place, has stated that maybe it is time for Russia to start developing its agricultural industry.
If enacted, the restrictions are expected to last for three years and could well have even more damaging effects on the entire U.S. meat industry.