Trading Up For a No-Cost Economic Stimulus Program
Jan 31, 2013
By Bill Horan: Rockwell City, Iowa
U.S. trade representative Ron Kirk confirmed last week that he’s leaving Washington for the private sector. He deserves praise for the Obama administration’s major achievement on trade: final approval of free-trade agreements with Colombia, Panama, and South Korea that had been negotiated by President Bush and his trade representatives but languished in Washington for years.
These three deals are already helping the U.S. economy by making it easier for Americans to sell goods and services abroad.
Complacency now becomes a danger. Exports have fueled America’s sluggish economy for several years, but they’ve slowed down in recent months. As President Obama begins his second term, he must first find a new trade diplomat and then push for new trade pacts.
An excellent opportunity awaits across the Atlantic Ocean: The White House should actively pursue a U.S.-European Union free-trade agreement, which would benefit Americans directly but also improve conditions around the globe.
Three years ago, President Obama announced his National Export Initiative, promising that U.S. exports would double in five years. Initial signs suggested that he might make good on this pledge, as exports expanded by about 11 percent in 2010. Yet they’ve dropped ever since, to less than 7 percent in 2011 and, according to the latest figures, less than 4 percent in 2012.
At this rate, we’ll fall far short of the administration’s goal.
The president will blame the lousy world economy, and he’ll have a point. Yet there’s no reason to admit defeat--and in a poor climate, developing an aggressive trade agenda that helps Americans export goods and services becomes even more urgent.
Together, the United States and the EU are responsible for almost half of the world’s GDP. We already trade a lot: Trans-Atlantic trade is worth more than $900 billion annually. Yet we can do even better. The European Commission believes that an ambitious agreement could boost trade by 50 percent.
Generating that much economic activity would be like passing a stimulus program. And it wouldn’t cost our debt-ridden government a penny. Simply by lowering tariffs on both continents, new trade would generate business, creating opportunities for entrepreneurs and jobs for workers.
The alternative is to do nothing--and doing nothing isn’t free. It could prove costly. Last year, U.S. exports to the EU actually declined by about 1 percent. Without positive action, we may see more stagnation rather than growth.
Agriculture often poses problems in large trade deals, and it would be no different with the EU. Yet a comprehensive agreement could do enormous good, not just for farmers in the United States, who would sell more of what they grow, but for people in the developing world.
One of the issues that will need to be covered is the acceptance of biotechnology as an acceptable tool of agriculture production. I believe a good trade agreement would require the EU to accept more food with GM ingredients--a common phenomenon throughout the Western hemisphere, but distrusted in Europe due to anti-scientific prejudice.
The good news is that most thinking Europeans know that biotechnology makes sense. European regulators have declared it safe. A growing number of scientists speak out on its behalf. A month ago, British environmental activist Mark Lynas announced his support for GM crops.
Robust trade talks could provide the spark for Europe to lower its resistance. This would benefit people everywhere, in ways that the dollars and cents of trade figures fail to capture.
Modern food-production methods, including biotechnology, allow each U.S. farmer to feed 147 people. This amazing efficiency lets more non-farmers devote their energy and creativity to other projects--everything from pioneering vaccines to inventing the next cool mobile-phone app—instead of spending their day providing food for their own family.
Europeans should want this benefit for themselves, and they should hope it spreads into Africa, which looks to Europe for economic and political leadership. Global food and nutritional security depends on Africa to realize its full potential as a breadbasket, and increased acceptance of GM crops is one of the tools that should be available.
None of this will happen without political leadership.
President Obama’s immediate task is to appoint a new trade representative--a figure who will command respect in foreign capitals. Former Republican Senator Richard Lugar, who has a good relationship with the president, might be an inspired choice.
Then comes the hard part, but also the most important part: Thinking big on trade.
Bill Horan grows corn, soybeans and other grains with his brother on a family farm based in North Central Iowa. Bill volunteers as a board member and serves as Chairman for Truth About Trade & Technology (www.truthabouttrade.org). Follow us: @TruthAboutTrade on Twitter | Truth About Trade & Technology on Facebook.