Washington Insider - Tuesday

Washington Post on Trade Critics

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.


The Maine House of Representatives gave initial approval last week to a proposal that would allow residents to vote on whether packages of foods produced from genetically modified organisms should be labeled.

Maine has a genetic engineering label law on the books, but it does not kick in unless enough other states pass similar laws by 2018. The House approved the bill by an 85-59 count. It now moves to the Senate where the Republican majority is likely to be more critical of the measure.

Vermont is the first state to require labels for foods with ingredients from genetically engineered crops going into effect July 1.

Three years ago, Maine lawmakers passed a compromise bill requiring a similar label on the condition that five contiguous states approve similar legislation by 2018 -- the majority report would keep Maine's labeling law intact now and move out the repeal date from 2018 to 2022.

Maine cannot have a biotech labeling law unless, at a minimum, New Hampshire approves a similar measure. And New Hampshire lawmakers killed their labeling bill off in February.



Produce prices vary by form and by the specific fruit or vegetable in question, according to data presented by the Economic Research Service (ERS).

ERS analyzed 24 fresh fruits, 40 fresh vegetables and 92 varieties of processed produce, comparing them by price per cup equivalent -- the edible proportion of a food which fills a 1-cup measure in most cases. For lettuce and other raw leafy vegetables, the cup equivalent is a 2-cup measure, while for raisins and other dried fruits the cup equivalent is a half-cup measure.

No particular form of produce proved to be consistently less expensive. Fresh raw carrots are less expensive than canned carrots and frozen carrots, while fresh apples are cheaper than applesauce. Canned corn and frozen raspberries are less expensive than fresh corn and fresh raspberries, respectively.



The National Association of Wheat Growers (NAWG) announced Jim Palmer has decided to step down as its chief executive officer effective May 31, 2016.

"Jim has been a tremendous and tireless advocate of the U.S. wheat grower specifically, and the U.S. wheat industry in general, during his tenure as our CEO," stated NAWG President Gordon Stoner, a Montana wheat grower. "While we certainly don't want him to leave NAWG, Jim made it very clear to our Executive Committee recently that he strongly desired to reduce or eliminate a majority of his professional and personal obligations to spend more quality time with his far-flung family. Our entire officer team is very understanding and supportive of Jim's personal decision."

Stoner said NAWG will immediately begin its national search for a new CEO and has asked Palmer to assist the NAWG Executive Committee in managing that effort. Stoner emphasized that NAWG is in excellent financial shape and has assembled a very talented and dedicated advocacy and technical support staff, thanks to Palmer's recruitment skills and enthusiasm for wheat and those who produce it.

"Our strong financial position and excellent staff will serve as Jim's legacy," said Stoner.



The Washington Post recently posted a counter argument for Sen. Bernie Sanders, I-Vt., and his standard criticism of Hillary Clinton for her earlier support of trade agreements. The Post notes that as the campaign moves to the Rust Belt, the socialist contender is doubling down on protectionism.

The Post weighed in heavily and asserted that Sanders' stance is built on bogus numbers that defy the overwhelming consensus among economists, and his solutions would do much more harm than good. "But politically, it appears to be working," the Post said.

The Post pointed to press reports of exit polls that indicated that Sanders' anti-trade agenda helped him. Fifty-seven percent of those who voted agreed that trade "takes away U.S. jobs," and 56% of them picked Sanders. Those figures augur poorly for Clinton's prospects in the Midwest — and for the political durability of the country's commitment to free trade.

The Post said that's unfortunate since Sanders's populist rhetoric doesn't stand up to scrutiny. His insistence, for example, that the North American Free Trade Agreement led to 800,000 lost jobs ignores analyses from unbiased sources such as the Congressional Research Service. "In reality, NAFTA did not cause the huge job losses feared by the critics," a 2015 CRS analysis found.

Blaming freer trade for the loss of manufacturing jobs fails to tell the much bigger story of economic transformation that has swept the world over the past several decades. Technological change, automation, productivity improvements and other factors have eliminated old-school manufacturing jobs all over the world. Sanders cannot bring back the U.S. economy of the 1960s, and it would be harmful to try.

The story about Sanders also neglected to mention the broad benefits that free trade brings. It pulls foreign trading partners out of poverty. It helps U.S. exporters, who account for an increasingly large share of American output. It enriches U.S. consumers, who get cheaper goods and greater selection. Economists resoundingly agree that these sorts of benefits outweigh the costs over time.

There are non-economic benefits as well, the Post asserted. NAFTA helped turn Mexico from an antagonist into a regional partner. The much-maligned Trans-Pacific Partnership (TPP) would knit the U.S. into the Asia-Pacific region for decades to come.

There is a downside to trade, the Post conceded, and that is that it promotes competition that may be costly for marginal sectors and so those affected can be politically mobilized. This may be politically difficult in sectors that are already in transition from new technologies -- making the developments observed difficult to sort, to the advantage of anti-trade advocates.

The solution, though, is not to provoke international enmity and trade conflict by adopting a hostile attitude toward would-be trading partners, the Post said. The smart policy is embracing openness and pocketing the overall gains in wealth and prosperity, while maintaining a safety net to help those who lose out -- good advice, although the winners from trade at least sometimes are not eager to share the increased costs of the necessary safety nets.

These nuanced arguments are difficult and sometimes messy to make, and Clinton has chosen not to try, perhaps in an effort to appease constituent groups. Instead, she has surrendered the issue by failing to stand up for the TPP. "Mr. Sanders already has the protectionists' vote," the Post said. "Ms. Clinton would be wise to offer a positive alternative."

Overall, the Democratic opposition to trade is bad news for the basic U.S. commitment to competitiveness, and probably indicative of future pressure for greater government intervention. The U.S. has already foregone its former leadership of support for greater global access in agriculture, as well as other areas by support of protectionist policies in recent years, a trend that seems likely to continue, Washington Insider believes.

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