The Election and Trade Agreements

October 22, 2016 02:32 AM

Both major-party candidates for President disagree on a number of issues important to U.S. agriculture: the reach and extent of federal regulatory authority, federal land use and immigration policy. Although they cannot agree on much, one area of common ground that will impact agriculture is the Trans-Pacific Partnership (TPP). Both candidates have announced their opposition to this trade agreement. If Hillary Clinton and Donald Trump both oppose something, it must be rotten, right? Not so fast.

U.S. farmers and ranchers are the best in the world at producing food. However, U.S. consumers make up only 5% of the world’s population. Our agricultural system produces much more food than our population can consume. Because of this surplus of production, U.S. farmers are dependent on exports of agricultural commodities. According to USDA, agricultural exports are expected to top $133 billion in 2017, which accounts for roughly 23% of U.S. agricultural production.

However, in times of low commodity prices, we are reminded there are limits to our current trading relationships. Too many of our markets cannot be accessed by U.S. farmers. In some instances, countries protect their domestic industries by taxing U.S. products via tariffs to the point they are unaffordable. Other countries enact restrictions that ban the import of products based on production practices, such as genetic engineering or the use of growth hormones. 

Ratifying TPP would lower tariffs, reduce quotas and loosen trade barriers with 11 trading partners. It would eliminate non-tariff trade barriers that serve as protectionism wrapped in pseudoscience. TPP would improve access for U.S. products under the North American Free Trade Agreement (NAFTA) with Canada and Mexico. It would also provide robust new opportunities for agricultural products in Vietnam and Japan.

The benefits of TPP would resonate through farm country. Upon implementation, TPP is estimated to increase the value of agricultural exports by $5.3 billion annually, which would add 40,100 jobs to the U.S. economy. Much of these gains will be in the form of increased beef, pork and poultry exports, which will boost domestic demand for the grains and oilseeds used to feed these additional animals.

With the election coming down to voters based in traditional manufacturing communities, it is politically expedient to demonize free trade. It is a sad reality that workers in some sectors lose out when the U.S. loosens trade restrictions with other countries, and these job losses are concentrated in the factory towns that dot our country. However, free trade is not the only factor at play. Automation and technology has made many manufacturing jobs obsolete. Since World War II, inflation-adjusted U.S. manufacturing output has increased steadily from $400 billion to more than $2 trillion, annually. During that same time, factory employment has fallen from a 1980s peak of 19 million workers to approximately 12 million workers today.

TPP is not perfect. There are long implementation periods for some commodities. Some industries, particularly dairy, would still be subject to substantial protectionism. However, allowing this opportunity to pass by would be disastrous for U.S. agriculture’s bottom line. Other countries will continue to enter into their own trade agreements while we sit on the sidelines. Although it would not be as obvious as an onerous regulation or a tax hike, new demand that could boost prices would never come into being. That is why major agricultural trade associations, including Farm Bureau, are in support of TPP. 

Once the elections on Nov. 8 pass, let’s hope our government’s leaders will recognize the facts and reconsider their positions.  

This column is not a substitute for legal advice. 

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