The Truth about Trade
Dean is Chairman Emeritus of 'Truth About Trade & Technology, a nonprofit advocacy group led by a volunteer board of American farmers.
Needed - A Concrete Accomplishment
May 28, 2009
Theodore Roosevelt believed the construction of the Panama Canal was “by far the most important action I took in foreign affairs during the time I was President.”
He thought that his feat was born of bold political action, too: “I took the Canal Zone, and let Congress debate, and while the debate goes on the canal does also.”
President Obama faces a similar leadership challenge, also involving Panama. He can let the debate about the merits of a free-trade agreement with Panama run on indefinitely, like a never-ending academic seminar. Or he can move now to make sure the United States finally implements a mutually beneficial accord with this small Central American country.
Although Obama often sounded like a protectionist when he campaigned last year, his initial moves in the White House have indicated a possible change of heart. What he lacks at this point is a concrete accomplishment. Concluding the Panama accord, an objective that eluded the Bush administration, would represent a solid success in the early days of his term.
U.S. trade representative Ron Kirk recently observed that there is “a window to move forcefully” to get the deal done by July 1, when current Panamanian president Martin Torrijos steps down from office.
The agreement certainly makes sense for the United States. Our markets are essentially open to Panamanian products. Last year, we imported $377 million in goods from Panama. More than 90 percent entered duty free.
By contrast, we exported nearly $5 billion to Panama. Many of these made-in-America products faced tariffs. The average duty was more than 6 percent, though for some items the rates soared far higher. This is especially true for agriculture. Assistant trade representative Everett Eissenstat recently noted that Panama’s tariffs can rise to 70 percent for meat, 90 percent for grain, and a whopping 260 percent for chicken.
Under the trade agreement, we’d benefit from a balanced playing field. The pact would eliminate tariffs on 88 percent of our exports right away, including 60 percent of farm goods. The rest would phase out over time.
In a few areas, the advantages of the trade agreement for farmers would be significant but not obvious. Senator Charles Grassley of Iowa, for instance, has noted the value of having Panama “lock in” its current zero tariffs on soybeans imported from the United States.
Whenever two countries remove artificial barriers to the flow of goods and services, they create more economic activity--including the creation of new jobs, which should be a priority for Washington these days.
Yet the present opportunity in Panama involves more than greasing the skids of existing trade. Today, Panama is home to one of the world’s biggest economic-stimulus projects: The historic expansion of the canal between the Atlantic and Pacific Oceans, to modernize it for the 21st century.
As I personally witnessed during a trip in February, they’re blasting rock now. For the United States, the choice is simple: Do we want to watch, or do we want to help them build?
If we’re content to sit back and watch, then we don’t need to do anything. We can let the trade agreement languish as Congress continues to bicker, which is what it does best. Meanwhile, our competitors in Canada, Europe, and elsewhere will be happy to sell Panama all of the equipment and services it needs to complete this massive public-works project.
But if we want to reap the rewards of participating in a $5.25-billion endeavor, Obama needs to act with the resolve of Roosevelt: He must get this trade agreement approved. The age-old debate over free trade and protectionism can go on as before. So can the expansion of the Panama Canal, but now with the full involvement of American companies and workers.
In other words: They will build it. Will we come?
The result probably won’t be “by far the most important action” Obama takes in foreign affairs during his presidency. But it will establish an achievement upon which larger legacies may be built.
Tim Burrack raises corn and soybeans in partnership with his brother on their NE Iowa family farm. Tim is a Board Member of Truth About Trade and Technology www.truthabouttrade.org