Let common sense, not fear, dictate trade policy
Here’s the good news: America’s trade policy has again taken center stage in public discourse after a long hiatus.
The bad news? Americans are getting a mixed bag of information, and much of it is grounded in fear and isolationism rather than facts.
Regardless of what side of the debate you fall, there are undeniable truths about international commerce and the freer flow of goods and services.
First, isolationist policies never end well. History has proven that you cannot wall yourself off and expect to prosper, especially in today’s world.
Second, agriculture has unquestionably benefited from trade. Today, agricultural trade supports 1 million U.S. jobs, generates a $43 billion surplus and is responsible for nearly one-third of total farm income. Here in Iowa, grain trade generates $4.9 billion to the state’s economy and contributes $1.5 billion to the gross state product. (Source: Informa for USGC/NCGA) You cannot support America’s farmers and oppose trade.
Finally, we know that foreign governments don’t always play by the rules. They use tariffs, trade barriers and subsidies to give their industries an advantage over U.S. workers and businesses. You cannot reverse the rising tide of such market-distorting policies without trade negotiations.
With these three undisputable facts in mind, and using some good old-fashioned common sense, it is easy to see that America is far better off trading than retreating in the future.
Considering that 95 percent of the world’s consumers live outside our borders, we must conduct business abroad to grow our economy, and that cannot be accomplished unless trade relationships are forged through negotiated pacts like the North American Free Trade Agreement and the pending Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (T-TIP).
The Peterson Institute for International Economics found that U.S. incomes are 9 percent higher today (about $1.5 trillion) as a result of U.S. trade liberalizing efforts since World War II. Furthermore, the group predicts that eliminating remaining trade barriers would increase the benefit by another 50 percent.
And these kinds of trade deals will be particularly important to reversing the economic woes currently facing rural America.
Today’s struggles exist largely because of low commodity prices. If trade dries up, common sense tells us that surpluses will grow, sending prices even lower. Conversely, if we open new markets, surpluses shrink, strengthening commodity prices and aiding the rural economy.
The American Farm Bureau Federation estimates $5.8 billion more in agricultural sales if TPP is approved, with trade in grains growing by 11 percent. TPP alone may not solve all of rural America’s problems, but establishing duty-free trade for most farm products with 800 million potential customers is a great place to start.
And TPP doesn’t just aid rural America. It also helps America address the inequities that too often vex U.S. businesses in the global marketplace.
TPP would roll back 18,000 taxes and trade barriers currently blocking U.S. goods. Obviously, eliminating 18,000 roadblocks to the Made-In-America symbol is better than eliminating none.
In fact, one could argue that abandoning trade deals like TPP or T-TIP would actually make it harder to achieve future foreign subsidy reform. That’s because if we signal that the world’s biggest and best producer is disengaging, we lose leverage and reward other countries’ bad acts with the promise of unearned market share.
Common sense is a precious commodity these days, but we need it now more than ever when discussing the direction of this country’s trade policy. We cannot chart a course for disengagement and isolationism and expect to build a better America. And we certainly cannot back down from seizing the tremendous opportunities TPP and T-TIP represent.
Abandoning decades of hard work in the global trade arena and retreating would be disastrous for Iowa and the United States alike.
Keller of Clarion is vice chairman of the U.S. Grains Council, representing the Iowa Corn Promotion Board.