Focus on Trade Profits, Not Process
American Farm Bureau
President, American Farm Bureau
Some economists are warning of a slowdown in American productivity, a slowdown that will weaken our strong dollar in relation to foreign currencies. On the surface, you would expect a weaker dollar to make our exports even more affordable to foreign consumers. But there is no guarantee that our export tonnage or our earnings would be better off because our products still face such punishing protectionism in so many lands that limit our access.
Every farmer knows the export litany We export about one-third of our production, some $50 billion worth of product, resulting in an agricultural trade surplus that ranges between $10 billion and $15 billion, depending on commodity prices for what we sell and what we buy. We can do much better by reducing and eliminating the many barriers in our path.
To successfully negotiate new trade advantages, though, Congress must grant trade promotion authority (TPA) to the president. We wanted this for the previous president, we want it for this president and we want it for the next president. The authority is a cooperative arrangement between Congress and the administration that lets the president and his negotiators work with representatives of other nations to improve trading rules. The president agrees to regularly consult with Congress and private sector advisory committees. Congress agrees to consider the final trade effort and either support or reject it without any amendments.
Too many observers try to politicize this necessary procedure. TPA is simply about process, not content. Foreign governments need to know that agreements reached with U.S. negotiators will not be subject to revision. And the United States must be a party to trade negotiations affecting agriculture. We are not going to solve our problems if we are not even at the table. Regardless of what each of us produces, U.S. farmers and ranchers need a global trading arena with lower tariffs; no export subsidies; non-trade-distorting domestic support programs; better dispute settlement rules and better rules to address import-sensitive products.
Here are some numbers to back up my points. Other countries' tariffs on agricultural imports average 62 percent. The United States imposes tariffs averaging 12 percent. The European Union accounts for 90 percent of the world's export subsidies, and they outspend us four-to-one on domestic support. The Paris-based Organization for Economic Cooperation and Development a forum for 30 member nations, including the United States, to discuss and analyze economic policy looked at all direct and indirect financial support various nations paid to their farmers in 2000. According to their study, the EU outspent the U.S. 6-to-1 on a per-acre support basis. Looking at the trade-distorting efforts of our competitors, it is little wonder that USDA reports U.S. market share for agricultural exports fell from 24 percent to 18 percent in the past 20 years.
The goal to develop markets again will be a major component of the next farm bill. Remember, the 1996 farm bill also promised this but the necessary negotiations were lacking, due in large part to Congress' failure to grant the president Trade Negotiating Authority at that time referred to as "Fast Track." We need only to look at our declining market share to recognize the role trade negotiations will play if we are to prosper. While exports will not be our total salvation, they are a necessity if we are to maintain U.S. agriculture's production efficiency.
World Trade Organization talks on agriculture could move fast. Can Washington move faster, to implement TPA? Judging by how fast Congress and the administration acted to pass and implement this year's emergency assistance package, with funds being distributed already this month, I would say so. Farm Bureau members last month met with their members of Congress, encouraging support of TPA. I believe our support for our elected officials should parallel the rise or fall of our world market share, a market share that is sure to increase with fairer treatment for our farm exports.