Washington Insider-Wednesday

Chamber Challenges Politicians on Trade

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

Saudi Arabia Reopens Market to U.S. Beef

Saudi Arabia said it is opening its market to U.S. beef after a four-year ban put in place over concerns about bovine spongiform encephalopathy (BSE), commonly known as mad cow disease.

The country will immediately allow imports of beef and beef products from cattle less than 30 months old, and will expand access to include products from US cattle under 48 months after a phase-in period, according to a July 1 statement from the Office of the US Trade Representative (USTR).

Eligible products include bone-in and de-boned beef, offal, ground and processed beef. The USDA's Agricultural Marketing Service is developing a program to certify U.S. beef to Saudi Arabia's import requirements to address the specific conditions in that market. That program should be announced in the next few weeks, according to the statement.

"The United States exported over $31 million of US beef and beef products in 2011, prior to the ban," USTR Michael Froman and Agriculture Secretary Tom Vilsack said in a joint statement. "Saudi Arabia consumers will now have the opportunity to enjoy high quality American beef."

Sanders and Allies Push for Anti-TPP Language in Democratic Platform

Efforts to include language in the Democratic Party platform that explicitly opposes the Trans-Pacific Partnership (TPP) trade deal are continuing, with the presidential campaign of Bernie Sanders, I-Vt., and progressive groups leading the charge.

The Democratic Platform Committee will meet in Orlando on July 8-9 to approve the final draft of the platform.

Sanders' presidential campaign and Democracy for America, a political action committee founded by former Democratic National Committee Chairman Howard Dean, are circulating separate petitions calling for language in the platform opposing the TPP.

The efforts push back against a July 1 draft of the platform stating that "there are a diversity of views in the party" on TPP, which was signed in February but has yet to be sent to Congress by President Barack Obama.

"The Democratic Party must go on record in opposition to holding a vote on the TPP during the lame duck session of Congress and beyond," the Sanders campaign said in the petition on its website.

The Democracy for America petition said opposition to the "job-killing TPP" isn't outside of the mainstream in the Democratic Party since both Sanders and former Secretary of State Hillary Clinton, the presumptive Democratic presidential nominee, opposed the trade deal during the primaries.

Washington Insider: Chamber Challenges Politicians on Trade

The Brexit vote in Britain has generated an amazing outpouring of talk, with some of the vitriol stunning for its lack of relevance. For example, a widespread theme among many commentators is that Brexit was a revolt among the common people against the elite and against trade.

And, anti-trade arguments have caught fire in both parties this election year, raising questions of whether even promising trade deals can be supported in the future. That thread has worried businesses, especially those who depend most on overseas customers. That concern has led Thomas Donohue, president and chief executive of the U.S. Chamber of Commerce to take pen in hand this week to address the issue in the Washington Post.

He starts by lambasting politicians and their anti-trade rhetoric that relies heavily on appeals to populist anger and a nationalist mood, and especially their willingness to focus on only part of the story. Trade is not only good for the country, it is vital for our economy. And, yes, it helps American workers, Donohue says.

He admits that some workers have been displaced by trade and they deserve help to compete and succeed in the 21st-century economy. But misguided proposals to build tariff walls, tear up trade agreements and turn inward would only hurt those the candidates claim to be willing to protect, Donahue argues.

In the worldwide economy, he thinks trade is our best tool to create new jobs and spur growth here at home. About one-third of U.S. jobs created between 2009 and 2014 were in trade-dependent industries, he notes. Today, more than 40 million American jobs are tied to trade.

The presidential candidates "often use the so-called demise of manufacturing and the shift away from traditional factory floor jobs to make their case against trade," Donohue argues. But the facts get in the way -- U.S. real manufacturing output has risen by more than 75% over the past 25 years and is at a record high today. Though some industry jobs have been lost due to technology and efficiency, trade remains a strong driver of manufacturing jobs. Exports support approximately 6 million U.S. factory jobs — roughly half of all manufacturing employment.

One in three acres on U.S. farms is planted for exports, he says. For many crops, such as wheat and almonds, more than half is sold abroad. U.S. agriculture is so productive that there's no way Americans could consume this bounty alone.

Also, our standard of living depends on our ability to import goods from around the world. In fact, international trade boosts the average U.S. household's annual income by more than $13,600, benefits enjoyed disproportionately accrue to the poor and middle classes, Donohue asserts.

He also argues that businesses care about those who have been negatively affected by trade, and thinks that "we must help them" but building tariff walls around the U.S. economy wouldn't bring those jobs home. Instead, it would decimate millions of high-wage American jobs and slam families trying to make ends meet. Increasing tariffs on Chinese and Mexican goods could cost American families $250 billion per year.

Furthermore, he argues that. "We're never going to solve the problems that the political candidates are so fond of talking about on the campaign trail if we turn inward, retreat from the world and strangle our own growth. Expanding trade is key to making our country and people more prosperous and more secure. So let's build bridges, not walls, he says."

It is likely that Donohue is right, and that while nobody is really sure what Brexit was really about, trade anxiety may well have played a part but increasing British isolation in response may be a costly mistake, he thinks. In fact, most analysts agree that trade increases competition, and thus benefits both sides by shifting resources to more productive uses. This is difficult for those whose jobs are most affected but he thinks it is clear that international competition stimulates productivity growth and brings real benefits.

Well, it is too early to even begin to see what Brexit means, but it appears to threaten both agricultural markets and market access. How much of a threat, and who that threat will affect the most remains to be seen, but should be watched carefully, Washington Insider believes.

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