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December 2008 Archive for The Truth about Trade

RSS By: Dean Kleckner, AgWeb.com

Dean is Chairman Emeritus of 'Truth About Trade & Technology, a nonprofit advocacy group led by a volunteer board of American farmers.

Trade Champion

Dec 31, 2008
A 20th-century historian was once asked for his opinion of the French Revolution. “It’s too early to tell,” he said of the event that had taken place 200 years before his time.
Judging President Bush’s legacy (or any President’s legacy) isn’t nearly so complicated, even for scholars who can’t make up their minds. Yet the passage of time always puts things in a less-partisan perspective.
Example: Was the war in Iraq worth it? The answer will hinge on what Iraq looks like years from now, and whether it grows into a vibrant Middle-Eastern democracy or turns into a lair for Islamofascist terrorism. Will it be a good or bad model for other Middle Eastern countries?
Right now, it’s possible to hold an opinion about Iraq’s future. Utter certainty, however, will have to wait.
Reasonable people can differ on Bush’s policies, from his handling of the current financial crisis to whether tax cuts and the prescription drug bill were worth it.
Yet in at least one area, our outgoing president deserves strong praise: He has championed free trade in both word and deed. In doing so, he has expanded economic opportunities for ordinary Americans.
When Bush took the oath of office in 2001, the United States benefited from free-trade agreements with only three foreign countries. Today, we have deals with 11 more. As U.S. Trade Representative Susan Schwab recently noted, exports to these nations have grown 80 percent faster than our exports to the rest of the world.
We’ll increase this advantage if Congress approves three additional pacts negotiated by the Bush administration: free-trade agreements with Colombia, Panama, and South Korea.
Failure to act on these opportunities only hurts us. Canada, for instance, has just completed a trade deal with Colombia. Colombia’s 45 million people--a market larger than California’s--now will find it easier to purchase goods and services from Canadians than from Americans.
If Congress were to approve our own accord with Colombia, farmers in particular would profit. Currently, all of our agricultural products pay Colombian tariffs. Under the terms of the agreement, however, half of them immediately would enter Colombia duty free. Remaining barriers would vanish over 15 years. Result: more ag exports to Colombia.
The U.S.-Colombia Free Trade Agreement obviously won’t save our economy. Yet deals like it make a big difference for a lot of individual Americans by preserving their jobs and creating new ones. Combined with other agreements, free trade begins to look like a major force for economic betterment.
Our country’s current financial plight is bad enough, but it would be much worse if Americans couldn’t sell goods and services abroad. In 2008, exports actually were THE bright spot for our economy. Moving forward, we should seek to expand upon this success rather than retreat into the false comforts of protectionism.
This will be one of the central challenges that President-elect Obama confronts. Shortly after the election, Christopher Padillo, a trade official in the Bush administration, cautioned that Obama will face “more political pressure for protectionism than any other chief executive since 1930.”
That’s an ominous warning, because the Smoot-Hawley Tariff Act, passed in 1930 under President Hoover, played a key role in prolonging the Great Depression.
We don’t analyze presidential legacies to replay previous elections or score partisan political points. We analyze them because we want to learn from the past--and specifically to avoid repeating the mistakes of earlier generations. Smoot-Hawley was a huge blunder, and we must do everything in our power to make sure that its hard lesson was well learned.
Bush’s record on trade isn’t perfect. His willingness to accept new tariffs on steel imports during his first term was misbegotten and may have played some part in hurting the domestic auto industry, with effects that we’re only starting to feel now. And although it’s wrong to place the shortcomings of the Doha round of world trade talks on the doorstep of his White House, it’s also possible to imagine how more creative leadership might have mattered.
On the whole, however, America is stronger today because of President Bush’s leadership and support for a freer global trade philosophy.
Barack Obama won election by promising change. When it comes to trade, however, he would do well simply to follow in his predecessor’s footsteps.
Dean Kleckner, an Iowa farmer, chairs Truth About Trade & Technology. www.truthabouttrade.org

Book of the Year

Dec 23, 2008
Mark Twain once defined “a classic” as “a book which people praise but don’t read.”
I’m going to praise a book you may not have heard of, let alone taken the time to read. But I hope you’ll pick it up because Robert Paarlberg has written a modern-day classic. “Starved by Science: How Biotechnology Is Being Kept Out of Africa,” published by Harvard University Press, is my Book of the Year for 2008.
Paarlberg grew up in West Lafayette, Ind., not far from the farm where his father survived the Great Depression. Today, he’s a professor at Wellesley College in Massachusetts--and he’s devoting his scholarship to helping Africans escape from a depression that never seems to end.
You’ve heard the grim statistics. The United Nations keeps a list of the world’s 50 least-developed countries. Thirty-five are in Africa. They are the poorest and hungriest nations on the planet.
Why is Africa so impoverished? Paarlberg points to the central problem: “Low productivity in farming is the trap that is currently keeping most Africans poor.” What they most urgently need is a “science-based escape from rural poverty.”
Unfortunately, this common-sense solution is also a controversial proposition.
Much of the rest of the world is living through an agricultural renaissance. In the United States, farmers are producing more food than ever before, and doing it in a sustainable manner. Thanks to the Green Revolution, the best farming practices are now widely accepted throughout Asia and South America.
Yet Africa remains different. Its farmers continue to struggle and even lose ground. Paarlberg cites this bracing statistic: “In the United Kingdom, there are 883 tractors per 1,000 agricultural workers, whereas in sub-Saharan Africa there are now two per 1,000, which is actually a drop of 50 percent from the 1980 level of three.”
The continent’s problems are complex. They include everything from rotten political leadership to the HIV/AIDS epidemic. The devastating inability to produce enough food, however, lies at the heart of the crisis.
The solution isn’t to keep out promising agricultural technologies, even though this is precisely what a lot of non-governmental organizations now demand. Scandalously, many of them encourage African nations to turn away from proven farming practices in favor of “indigenous” techniques (meaning they are primitive).
“In effect, rich outsiders are telling African farmers it will be just as well for them to remain poor,” writes Paarlberg.
The European Union should take a special interest in Africa’s problems for reasons of geographic proximity and colonial history. Yet the EU merely makes matters worse. Its own rejection of agricultural biotechnology has compelled many African countries to do the same.
“European tastes regarding agricultural GMOs are not a good fit to the needs of Africa, given that two-thirds of Africans are poor farmers in desperate need of new technologies to boost their crops’ productivity,” writes Paarlberg. “Keeping the new technology of genetically engineered crops away from these African farmers will come at a heavy and steadily increasing price.”
In their foreword to “Starved for Science,” Norman Borlaug and Jimmy Carter demolish the mindset that refuses to let Africans take advantage of the best farming methods: “This is a rich-world argument that is hurting the poor.”
A lot of us have been saying such things for years. Paarlberg says them with the authority of an academic--and with a good amount of bravery, too. Although Paarlberg in some ways holds the views of a typical college professor he isn’t afraid to take politically incorrect positions.
“Many of the arguments put forward in this book go against dominant opinion in my own social circles,” writes Paarlberg. “Many of my colleagues and students would recoil if they knew I wanted to replace traditional African farming practices with an increased use of high-yielding crop varieties, or even worse, genetically engineered crops.”
They should read “Starved for Science.” It will change their minds. If enough of them change their minds, this outstanding book may even wind up feeding hungry Africans.
Dean Kleckner, an Iowa farmer, chairs Truth About Trade & Technology. www.truthabouttrade.org

Making the Team

Dec 18, 2008
Farmers have been looking for a friend in Barack Obama’s cabinet, and this week they appear to have found one or two. But we could use a third.
On Wednesday, Obama introduced Tom Vilsack, a former governor of Iowa, as his pick to become the next Secretary of Agriculture. The president-elect also announced Sen. Ken Salazar of Colorado as his selection for Secretary of the Interior.
These choices send a reassuring signal to farmers who have recently grown uneasy about the composition of the incoming administration. Even so, Obama has yet to fill the Office of the U.S. Trade Representative. We are all counting on him to make a sensible decision.
Obama’s initial cabinet nominations, involving economic policy and national security, demonstrated a healthy commitment to centrism and even bipartisanship. Then the president-elect seemed to lurch to the left with the so-called ‘Green Team’, whose members include Steven Chu as Secretary of Energy, Lisa Jackson as head of the Environmental Protection Agency, and Carol Browner and Nancy Sutley as top White House advisors.
Ronald Reagan used to joke that the most terrifying words in the English language are: “I’m from the government and I’m here to help.”
Many farmers worry that the Green Team’s vision of “helping” agriculture includes burdensome regulations and sky-high gas and energy prices. As we confront the global recession and food crisis, farmers and consumers alike will need policies that boost productivity rather than depress it.
Vilsack and Salazar will make sure that when the Obama cabinet meets, farmers will have a place at the table. It remains to be seen how potential disagreements with the Green Team are settled, but for the time being farmers can take comfort in knowing that their voices at least will be heard. (In the end, all disagreements are settled by the President)
Vilsack, in particular, will play a key role. Although he’s not a farmer himself, he understands farming in all of its dimensions. He’s a strong advocate of biotechnology, from the importance of GM crops to the promise of alternative fuels. Last year, he ran a climate-change panel that recommended the gradual elimination of subsidies for certain biofuels and the lowering of tariffs on Brazilian sugar ethanol.
He’s also a supporter of free trade, which is so vital to American farmers. We depend heavily on overseas customers, and rely on political leaders in Washington to expand export opportunities through smart diplomacy. But it’s primarily up to the U.S. Trade Representative--not the Secretary of Agriculture--to make sure America’s rural economy remains plugged into the global marketplace.
Earlier this month, Obama invited Rep. Xavier Becerra of California to become the Trade Representative. For those of us who have the audacity to hope that the protectionist rhetoric of the Obama campaign would transform into the common-sense reality of the Obama administration, this was a troubling development. Becerra voted against CAFTA and opposes pending trade agreements with Colombia and South Korea. Years ago, he voted for NAFTA but he now says he erred.
This week, however, Becerra snubbed Obama’s offer. The rejection gives Obama a chance to correct the mistake of having turned to Becerra in the first place.
The president-elect must make sure his administration is committed to American exports. He’ll need a person of special talents---the number one being pro-trade--- to serve as our country’s trade ambassador in these challenging times.
The World Bank recently projected that in 2009, world trade will actually shrink, for the first time in a generation. Separately, the Copenhagen Consensus has argued that the successful conclusion of the Doha round of trade talks will deliver billions of dollars of economic benefits to the developing countries--without costing American taxpayers a penny in foreign aid.
Our next Trade Representative must fight economic contraction rather than surrender to it. With the right kind of leadership, trade can become a tool to improve our current economic lot.
Now it’s up to Obama to make an appointment that rivals the soundness he displayed in picking Vilsack.
Dean Kleckner, an Iowa farmer, chairs Truth About Trade & Technology. www.truthabouttrade.org

A Sustainable Solution

Dec 12, 2008
The late newspaper columnist Bill Vaughan was famous for his aphorisms. Here’s one of his best: “When the insects take over the world, we hope they will remember with gratitude how we took them along on all our picnics.”
Well, that’s one way of putting it.
Everyone has swatted ants, squished spiders, or sprayed cans of Raid into suspected cockroach hideaways.
When it comes to insects, however, farmers are in an entirely different category from the rest of the world. You could almost say we’re professional exterminators. One of the most important things we do, after all, is eliminate bugs that will harm plants.
It’s not the very most important thing we do. That would be growing food. But growing food often means killing specific bugs--or, if you prefer, pests. You can’t do the one without the other.
Today, new research confirms the pest-alleviating benefits of biotechnology: It offers pest protection that’s both effective and sustainable. You could say it’s a sustainable solution that lets us have our picnic and eat it, too.
Farmers don’t kill bugs out of sadism, of course. We do it because we need to defend our crops from tiny predators. Some pests simply try to consume what we grow for people. Others chomp their way into plants, opening pathways for disease. The word “pest,” by the way, derives from the Latin word for “plague”--just like “pestilence.”
So we wage a never-ending war against these ruthless attackers. But we don’t need to kill bugs indiscriminately. As with any war, we try to focus on the true malefactors and limit the collateral damage. Just because I want to keep corn borers out of my fields doesn’t mean I also want to eliminate ladybugs.
We already know that one of the major advantages of GM crops is that they reduce pesticide exposure among farm workers. They happen to do the same thing among insects. In particular, they limit collateral damage among insects that aren’t pests.
The most common form of biotech crop makes use of a natural protein produced by a type of bacteria called Bacillus thuringiensis, or Bt for short. The protein is completely harmless to humans and most other living things. To certain types of bugs, however, it acts as an effective insecticide. Long ago, scientists learned how to use this potent trait by spraying the bacteria themselves directly on the crops. In fact, this is a preferred method of insect control for organic food production. More recently, they’ve figured out how to import the protein precisely into crops, through biotechnology.
Using this biotech approach has proven so effective at pest control over the last dozen years or so that farmers all over the world have rushed to use it. Soon, we will harvest the two-billionth acre of GM crops. (Check out the live biotech acre counters on www.truthabouttrade.org) The result is a lot more meals for hungry humans and many fewer garden parties for creepy crawlies.
But how do GM crops affect insects that aren’t pests? Are they effective because they just kill, kill, kill? It’s a fair question. Although sometimes it’s necessary to make trade offs between social goals, we do not want agricultural practices that don’t sustain the environment.
Last month, the U.S. Department of Agriculture’s research agency published its own conclusions, in collaboration with scientists at the University of Nebraska, Iowa State University, and the Environmental Protection Agency. They called it a “meta-analysis,” which is a fancy way of saying they performed a comprehensive examination of previous research into this subject.
The result is a ringing endorsement of biotechnology’s ability to deliver sustainable benefits: “Non-target insects are probably affected more by conventional insecticides than by crops that contain genes from the soil bacterium Bacillus thuringiensis,” said a press release. “Bt crops have considerably less impact on non-target insects than do conventional insecticides.”
In other words, biotech crops are a sustainable method of pest control. They provide protection without causing an undue amount of damage to harmless insect populations.
A wise environmental movement would cheer these results and realize that agricultural innovation is a friend rather than a foe. You might even say that the greens should imitate biotech crops--and do a better job of targeting their real enemies.
Dean Kleckner, an Iowa farmer, chairs Truth About Trade & Technology. www.truthabouttrade.org

Refuse Protectionism

Dec 05, 2008
Somebody must have neglected to give President Bush the memo suggesting he would be irrelevant post-election. Amid all the interest over the incoming Obama administration, he’s not acting like a lame duck. Instead, he’s still behaving as the leader of the free world.
“I recognize I’m leaving office in two months,” said Bush at the Asia-Pacific Economic Cooperation forum a couple of weeks ago. “Nevertheless ... we can send a message: We refuse to accept protectionism in the 21st century.”
I hope the world is listening. This is one of the most important messages it must hear as we enter what may be a prolonged downturn.
In capitals everywhere, presidents and prime ministers are talking about economic-stimulus plans. They would do well not only to avoid protectionism, but also to lower existing trade barriers.
Perhaps the worst thing countries could do right now is turn their backs on free trade and usher in the very opposite of a stimulus. “One of the enduring lessons of the Great Depression is that global protectionism is a path to global economic ruin,” said Bush.
As Hillsdale College professor Burton Fulsom Jr. points out in his new book, New Deal or Raw Deal?, the Smoot-Hawley Tariff Act helped turn what might have been a run-of-the-mill recession into the Great Depression. Between 1929 and 1932, as other countries retaliated by erecting their own trade barriers, U.S. exports dropped from $7 billion to $2.5 billion.
For farmers, the stakes are especially high, because we rely on export markets for so much of what we grow. Our forebears suffered dearly under Smoot-Hawley and we would suffer again today.
The lesson is obvious: In a protectionist trade war, there are no winners.
Global leaders seem to understand this, at least judging from their rhetoric. At the Group of 20 meeting in November, they put out an encouraging joint statement: “We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. In this regard, within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services.”
Unfortunately, Russia--a member of the G20--promptly ignored its pledge and slapped new import duties on cars. It defended the move by saying that the decision to impose the tariff had been made before the G20 summit.
Struggling American automakers are currently seeking a huge bailout from Washington. Reasonable people may differ on whether this makes sense. Personally, I’m very skeptical. Yet we should all be able to agree that the best solution for the woes of GM, Ford, and Chrysler involves encouraging them to sell more vehicles. Preventing Russia and other nations from building new trade barriers should be a major goal. It has the added benefit of costing U.S. taxpayers absolutely nothing, which makes it the best kind of stimulus plan.
The worldwide economic crisis goes far deeper than car sales, of course. Protectionism puts everything at risk. Our leaders not only must fight against new impediments to trade; they should seek to lower those that already exist.
The failure to do so will hurt Americans. The Bush administration, for example, has negotiated a free-trade agreement with Colombia. Yet Congress has refused to even consider it. Meanwhile, Canada has concluded its own pact with this Latin American country. Its farmers and manufacturers will now enjoy excellent access to Colombia’s market of 45 million people--and they have a competitive advantage against U.S. products.
Congress should put American products on equal footing. It would provide a small but worthwhile stimulus to our economy.
At the APEC meeting in Peru, Bush called for a trans-Pacific free-trade zone--a very good, long-term goal. The 21 APEC countries account for about two-thirds of America’s international trade. Improving the flow of goods and services across these borders makes sense.
So does pushing for more ambitious gains. The G20 and APEC meetings led to calls for jump-starting the Doha round of world-trade talks. Earlier this year, they collapsed as rich and poor countries bickered over tariffs and subsidies. If they merely could agree to a set of modalities before Bush leaves office, they will have made significant progress toward a final agreement and give Obama a leg-up.
The result would be a worldwide economic stimulus package. It wouldn’t cost taxpayers a dime. Doesn’t that sound like a good idea?
Dean Kleckner, an Iowa farmer, chairs Truth About Trade & Technology. www.truthabouttrade,org
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