The U.S. is home to the most efficient and productive large-scale agriculture in the world. In the case of many commodities, we produce much more than we can ever consume here at home. That’s where international sales come in. Below are the basics of Free Trade Agreements, and why one proposed agreement, the Trans-Pacific Partnership, is front and center in the current presidential campaign. Should you care about trade policy? Read the following and then decide.
Here Comes a Trade Pact for the European Union
There’s another trade pact on the horizon, although it’s far from a done deal. The Transatlantic Trade and Investment Partnership (TTIP), under development for three years, would seek to do for trade between the U.S. and European Union (EU) what other Free Trade Agreements have done for other regions. The EU is the fifth-largest market for U.S. ag products.
Among the Obama Administration’s goals for the pact is the elimination of all tariffs and duties on ag products. Another priority is to standardize the regulatory process for approving GMO traits, a sticking point between the EU and U.S.
A successfully negotiated TTIP would go a long way toward evening the trade imbalance between the EU and U.S., supporters say.
“Right now, the EU exports nearly twice as much in food and ag products to us as we export to them,” said Jonathan Cordone, U.S. deputy undersecretary of agriculture, earlier this year.
“When the U.S. has an ag surplus of $16 billion to the rest of the world, but an ag deficit of $12 billion to the EU, you know there’s work to be done,” Cordone told a meeting of the U.S. Meat Export Federation board of directors in St. Louis.
But trade negotiators for both sides left talks in New York in early October—the 15th round of discussion on the deal—after making little progress.
According to the EU, it’s willing to eliminate tariffs on nearly all goods, but it’s unwilling to remove tariffs on beef, poultry and pork.
EU negotiators also indicated they would allow some market access for “sensitive” products, including meat, if the U.S. agrees to the EU’s demands on reciprocal access and on protections for products labeled with geographical indicators.
The National Pork Producers Council calls the future of TTIP “uncertain.”
No talks have been scheduled beyond October.
By Tyne Morgan
Is NAFTA Really So Bad?
Republican presidential candidate Donald Trump has called the North American Free Trade Agreement (NAFTA) “the worst trade deal ever signed,” especially as it affects manufacturing. He promises to try to renegotiate NAFTA if elected.
This hallmark of Bill Clinton’s presidency and the largest trade pact in history went into effect in 1994. Since that time, ag exports to Canada and Mexico have more than quadrupled, jumping from $8.9 million in 1993 to $38.6 billion in 2015, according to USDA.
Canada is the top destination for U.S. ag products, including fresh fruits and vegetables. Mexico is the top export market for U.S. corn, soybean meal and poultry.
Supporters, including the American Farm Bureau Federation (AFBF), credit NAFTA with helping boost sales inside our neighbors’ borders.
“Because of that free trade agreement, [the U.S.] has a market share in those two countries of about 65%,” says Veronica Nigh, an economist with AFBF.
While impressive numbers, not every ag group supports NAFTA.
In a 2015 report, the U.S. Commerce Department determined Mexico was subsidizing its sugar imports, allowing exporters to dump products into the U.S. at 40% below market prices.
As a result, Mexico signed a suspension agreement with the U.S., limiting shipments. However, sugar beet farmers say the sugar continues to come into the country under the radar, making it a challenge for U.S. sugar beet producers.
“We’ve had sugar come in under the cost of production,” says Duane Maatz, executive director of Red River Valley Sugar Beet Growers Association. “The world market is really a dump market. It’s not the real, true market that growers sell it to. The government is simply recovering a part of their cost.”
While other segments of the ag industry benefit from NAFTA, Maatz believes some of the pieces of the massive trade agreement should be re-evaluated, not thrown out.