In forefront of wanting trade opening
June 10, 2014
It feels redundant for this page once again to declare its strong support for international trade agreements meant to ease the access of U.S. exporters to foreign markets, while also recognizing the likely spur to foreign sellers into America. Like so many advocates of trade liberalization, disappointment is also voiced with the hesitancy of the Obama administration in seeking congressional approval of trade pacts that offer opportunities for building foreign markets that would benefit the American economy. That leaders of President Obama’s own Democratic party in the House and Senate have raised objections to various agreements and have threatened rejection of the essential provision limiting congressional votes on new pacts to “yes” or “no,” but without amendments, speaks to the president’s lack of a strong stand. Most discouraging is Mr. Obama’s failure to do what presidents of both parties have favored since the end of World War II.
Issues affecting grain-based foods have an insignificant role in the administration’s reluctance to press forward. White House concerns are primarily with the worry that opening trade might spur import growth that could dampen job creation. To many observers, these job worries, embraced by major unions as campaign fodder, are viewed as much less serious in the future than the minimal role they had in the past. In an age when technology is in the forefront of industrial progress, benefits from a broadening in export markets far outweigh employment negatives.
Indeed, grain-based foods could be cited to show how such concerns are misplaced. Baking and consumer foods manufacturers in general have faced slightly more competition from imports. Any increase in imports of items like bread and pasta has been nearly matched by export gains. Growth of international trade in packaged foods suitable for shipping to other countries requires the rules on food standards, on packaging and health issues, on even product names that carefully written agreements should make happen. All these positives aside, an industry that has flour milled from wheat as its major ingredient benefits directly from steps that spur crops larger than domestic requirements. Such a crop provides quality and quantity choices to ultimate users with benefits measureable in actual cost calculations.
For flour milling, a single trade agreement named the North American Free Trade Agreement (NAFTA) has come to dominate foreign trade. Yes, exports of wheat flour have fallen sharply in the past several decades, even as world trade in wheat flour has risen to new records. The drop is largely the result of the U.S. government cutting back on foreign relief shipments and special financing of export sales. World trade has grown due to improved diets in countries that are not well located to be served by U.S. shipments compared with much nearer competitive sellers. America’s NAFTA partners, Canada and Mexico, accounted for 70% of U.S. wheat flour exports in 2013, and this share is likely to increase. Extending open trade to a major Western Hemisphere flour importer like Brazil could be a significant benefit for U.S. milling, prompting investments to add capacity along with employment gains.
So far as the wheat and grain export industry is concerned, liberalized trade has been near the top of its agenda for a long while, and continues to place this industry among the groups urging the Obama administration and Congress to act. In pursuing trade agreements that will encourage business while limiting some of the totally outrageous steps taken by buying countries at times to limit trade, the grain industry is aligned largely with wheat and other grain farmers.
Hardly anything is more essential to understanding broad advocacy of trade liberalization than recognizing that even in an industry like grain-based foods there are many reasons for worrying about pacts opening America to new competition. It is the willingness to face such competition while being confident about marketing gains that make industries like grain-based foods a great source of American economic strength.