Q: Why is international trade so important to agriculture?
A: The productivity of American farmers continues to rise faster than domestic demand. American farmers need foreign markets to sell commodities and value-added agricultural products. According to the U.S. Department of Agriculture, one out of every three crop acres is planted for export, and compared to the overall economy, U.S. agriculture is twice as reliant on overseas markets. Consumers in developing countries around the world choose different foods to eat as their incomes rise, so there are emerging opportunities for exporting meat, dairy products, and farm commodities. U.S. exporters need to be able to engage in those opportunities, with 95 percent of the world’s consumers living outside the United States. As the largest exporter of agricultural products in the world, the United States delivers high-quality, reliable products to consumers around the world. Here at home, these exports are essential to profitability in agriculture, and the economic activity they generate ripples through our domestic economy.
Q: What stands in the way of American farmers reaching new export markets?
A: Non-tariff trade barriers are the biggest impediments to agricultural trade and include a number of non-scientific and unjustifiable restrictions on production methods for pork, beef and poultry, as well as restrictions on genetically-modified crops and seed. The burden is on the U.S. Trade Representative to aggressively push back against these unfair barriers. Even so, the current administration has not maximized use of the tools available to resolve these disputes through the 157-member World Trade Organization. The United States was a major force behind the establishment of the WTO 18 years ago, and it’s a forum for dispute settlement resolution and trade liberalization negotiations. Trade negotiators for President Obama also need to fully use the leverage they have in ongoing negotiations with the countries participating in the Trans-Pacific Partnership trade talks, for example. Last year, these officials did not push as hard as they could have for U.S. agricultural interests when negotiating Permanent Normal Trade Relations with Russia. U.S. negotiators need to learn from these mistakes and do more to remove unjustifiable barriers.
Q: Where is legislative action needed?
A: Trade Promotion Authority, or TPA, has been expired since 2007. This authority allows trade agreements to be considered by Congress in an expedited way as long as the President has negotiated the trade agreements as required. The authority strengthens the ability of the President to negotiate with other countries because the other countries know the agreement won’t be altered by Congress. Congress also needs to monitor and encourage ongoing negotiations for the Trans-Pacific Partnership free-trade agreement (which involves 11 countries at this point), the future of the WTO Doha Round for multi-lateral negotiations generally, and trade liberalizing initiatives with the Middle East, the North African region, and the European Union. Again, these efforts for market access are especially important for American agriculture. Tariffs leveled by other countries against U.S. agricultural products still average 62 percent, which is far more than the four percent average for manufactured goods, according to the U.S. Department of Agriculture. Overall, a proactive agenda to expand international trade opportunities is a no-brainer for creating economic activity here at home. On average, trade-related jobs in the United States pay 13 to 18 percent higher wages than the national average. And Midwestern states like ours are the most reliant on agricultural export markets.