Trade and being able to export large crops to markets outside of the country remains vital to the viability of the farm economy, but the Trump administration is stirring the pot and testing the waters of some long-standing partnerships.
The administration first withdrew from the Trans Pacific Partnership (TPP), then made the call to renegotiate the North American Free Trade Agreement (NAFTA). Next on the list, it wants to tinker with the country’s relationship in the World Trade Organization (WTO).
The White House claims they want to negotiate trade disputes outside the WTO because the U.S. is not treated fairly, but there’s more to it.
“The reason we’re talking about leaving the WTO is because of our stance on NAFTA,” said Dan Basse, president of Ag Resource Company. “If indeed we want to renegotiate NAFTA, the Mexicans will probably walk from the table if we talk tariffs at all.”
However, Tom Sleight, CEO of the U.S. Grains Council, says agriculture has done well under NAFTA.
“The dispute settlement process has been very important to settling such key issues like on biotechnology access, phytosanitary measures,” said Sleight. “It’s something we need to be talking a lot more about.”
Beyond that, trade disputes can already be settled outside the organization.
“It’s something that we can do under our own U.S. laws,” said Steve Censky, CEO of the American Soybean Association. “However, if we did that, it would be challengeable within the WTO.”
To circumvent that, the U.S. would have to pull out of the WTO, something the administration has also mentioned. However, Mike Conaway, chair of the House Ag Committee, says trade agreements are only as good as the enforcement behind them.
“You look at our enforcement action that we’ve taken against China where they’re spending $100 billion a year on three crops,” said Conaway. “We spend $100 billion on our safety net over eight years.”
Farm groups are also opposed to pulling out of the 180-member trade pact. “If we pulled out of the WTO, suddenly we would have to negotiate new trade agreements with over 180 countries around the world,” said Censky. “Those countries could apply any tariff they wanted to our goods.”
Under the current WTO agreement, the U.S. has most-favored nation status, meaning lower trade tariffs with other countries in the deal. The ag community is urging the Trump administration to stay the course.
“We need the WTO in terms of a foundation for the rules of trade—we need that foundation, that global foundation,” said Sleight.