The Trump administration's trade team has done some good things recently and, even better, avoided doing some bad things. Whether this marks the beginning of an auspicious trend in trade policy is unclear, but before elaborating on that uncertainty let's give credit where credit is due:
--China has lifted its "mad cow" ban on U.S. beef. After 14 years out of the Chinese beef market, currently dominated by Brazil, Uruguay and Australia, American producers are back in. China's $2.5 billion in annual imports of beef are certain to grow and American beef has a good reputation in the market, so this is a real victory.
--China has agreed to let in American rice. That's another real step forward. China has been importing rice since it joined the World Trade Organization in 2001, but not from the U.S.; there was no phytosanitary protocol between the U.S. and China. Now there is, and while it will be difficult for U.S. growers to compete against Thailand, Vietnam and Pakistan for China's imported rice demand, that demand is enormous (4.8 million metric tons 2017-2018) and growing.
--Under the heading of avoiding bad things, the U.S. has taken another big step away from the president's campaign promise to withdraw from the North American Free Trade Agreement. President Trump had already backed off a bit, saying he would renegotiate NAFTA instead. Now his trade representatives have unveiled their objectives for the renegotiation, and many of them are about expanding access to Canada's and Mexico's markets rather than narrowing access to ours (http://tiny.cc/…).
For agriculture the list begins, encouragingly, with, "Maintain existing reciprocal duty-free market access for agricultural goods." The other items on the agriculture list are focused on market opening.
To be sure, the Trump team's position paper sets forth objectives -- like stopping currency manipulation and toughening enforcement procedures -- that an administration committed to free trade might not have mentioned. Still, it says a lot about the document that trade-union presidents and other advocates for protectionism are complaining about being betrayed.
The problem with protectionism for exporting sectors of the economy like agriculture is it invites retaliation. We block their products, they block ours -- to the detriment of American livestock producers and growers of grains and oilseeds. Farm groups have been frantically pressing this case in Washington and it looks like the administration may be getting the message.
So what's not to like? Three uncertainties come to mind.
--Is there any real chance of further trade gains with China? While important to farmers and ranchers, the concessions on beef and rice were barely a fraction of what the U.S. was asking -- and they were relatively easy ones for the Chinese to make, much easier than giving ground on, for example, intellectual property rights. The U.S. and China ended their talks so divided they didn't even put out a joint statement. U.S. chicken is still locked out; the Chinese say they have avian-flu concerns.
--Has the administration really changed its spots? The free traders among his advisers prevailed on NAFTA, but the ultra-nationalists retain influence. The president is pressing for big tariffs on steel imports. He has reserved the right to withdraw from NAFTA if he doesn't get what he wants from the renegotiation -- and some of what he wants might well lead to a contraction of trade rather than an expansion. His rhetoric remains protectionist.
--When, oh when, will the administration get to work on a trade deal with Japan? As I have pointed out in previous posts (for example, http://tiny.cc/… ), the president's precipitous withdrawal from the Trans-Pacific Partnership trade agreement has put U.S. farmers and ranchers at a competitive disadvantage in the large and profitable Japan market for imported beef, dairy and other agricultural products. TPP is the big trade issue on which the administration has violated the "do no harm" principle.
Mr. President, thanks for the market openings in China and for staying in NAFTA. Now please start undoing that TPP harm.
Urban Lehner can be reached at email@example.com
© Copyright 2017 DTN/The Progressive Farmer. All rights reserved.