Since 2010, the U.S. has exported more than $165 billion worth of staple U.S. agricultural products to 11 countries now part of a controversial pending trade deal known as the Trans-Pacific Partnership.
Those countries include Mexico, Japan, Canada and eight other nations. The free trade agreement’s supporters say it’s built to reduce trade barriers and encourage the free flow of goods. Overall, the deal spans thousands of pages long and is the biggest the United States has been a part of in a generation.
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“As farmers, we compete on a global scale and exports are real important to us,” said Stan Born, who owns Vintage Farms in Moultrie County, Ill., and serves as a director for the Illinois Soybean Association.
Negotiators finalized the Pacific partnership deal on Oct. 5 in Atlanta, but the agreement’s full 30-chapters’ worth of details weren’t released until Nov. 5.
Governments involved now must decide whether to approve the deal. In the United States, Congress has 90 days following the president’s announcement to sign the deal to review it and consider public opinion.
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Vietnam, Peru, Malaysia, Chile, Australia, Singapore, New Zealand and Brunei are also part of the Trans-Pacific Partnership. Combined, the 12-country pact would encompass 40 percent of the world’s production.
It’s too early to tell whether the deal will succeed in Congress, but one thing is already certain — its member nations are multibillion dollar customers for U.S. agriculture when it comes to beef, pork, poultry, eggs, dairy, corn, soybeans, wheat, tobacco and sugar.
An analysis of U.S. Department of Agriculture and World Trade Organization export data on those key farm commodities shows that Mexico has by far been the United States’ biggest agricultural trade partner throughout the past five years.
From January 2010 to August 2015, Mexico bought more than $66.3 billion worth of major meats and farm products.
Corn and corn products were the top U.S. farm export between Trans-Pacific Partnership countries during the same period, the analysis found. Since 2010, the 11 Pacific Rim nations have received more than $45.8 billion in corn and corn products.
“From the perspective of a farmer, this trade deal is a positive thing,” Born said.
Despite seemingly robust export numbers, trade barriers have limited the free flow of goods from the United States to the nations in the deal, creating a large degree of unpredictability from year to year, according to trade officials.
For example, U.S. wheat exports to Vietnam went from about $17 million to $78 million from 2010 to 2011, then fell in three out of the four following years.
In 2010, Australia imported about $76 million worth of U.S. soybeans and soybean products. That total dropped to just $1.5 million the next year. By 2013, U.S. soybean exports to Australia somewhat regrouped and reached $36.2 million, then plummeted to less than $600,000 in 2014.
The small nation of Brunei bought about $1.2 million worth of U.S. poultry in 2013, but only $44,400 worth of poultry in 2014. This year, Brunei hasn’t bought any U.S. poultry, export data shows.
The Trans-Pacific Partnership – and free trade agreements as a whole – can help reduce wild swings in trade from year to year by encouraging political and economic stability, according to Henry Nau, a professor at George Washington University’s Elliott School of International Affairs and former senior staffer on Ronald Reagan’s National Security Council.
“The open, free-trade market system that we’ve had is the right one,” said Nau, who has also worked in the State Department. “We’ve been incredibly successful for 70 years now in, you know, creating an open, competitive, peaceful world economy that has incorporated more and more countries that are doing well and that are satisfied.”
Putting economic pressure on China
Over the years, Nau has written columns for The Wall Street Journal, The National Review and International Studies Quarterly. While critics claim free trade forces jobs elsewhere and worsens labor conditions, Nau argues its gains outweigh its losses.
“The obvious downside is that our industries move – and eventually they move offshore, especially our manufacturing industries – in order to capture cheaper labor,” he said. “But in general, trade has benefitted the average person, as well as the country at large.”
For evidence of those benefits, Nau said consumers need only look to the aisles in their supermarkets.
“The biggest benefit any stay-at-home mom or stay-at-home dad for that matter can verify by just going to the local Costco or the local Walmart is just much lower prices for just about everything,” he said.
From a historical perspective, Nau said the U.S. agriculture industry came to the free trade market somewhat late. In the past, countries tried to protect their domestic farmers and were reluctant to open trade gates to commodities from other nations. Instead of taxes to control imports, several countries implemented strict quotas that prevented trade after a certain point all together.
To get its foot in the door, the United States proposed replacing caps with expensive tariffs. The long-term goal was to then come back years later and start reducing them.
“The idea was to prepare the way for lowering those tariffs,” Nau said. “In the Trans-Pacific Partnership, we started to do that a little bit.”
One of the biggest questions the deal poses is how China will react, Nau said. Many political pundits believe this deal is largely intended as a means to put pressure on China, a country that is often at odds with the United States. In 2013, China abruptly halted U.S. shipments of corn, claiming they included an unapproved GMO produced by Syngenta.
The trade interruption cost U.S. corn farmers billions of dollars.
“Under this agreement, we, rather than countries like China, are writing the rules for the global economy,” President Barack Obama said in a speech after meeting with the department of agriculture.
Executive Director of the Illinois Corn Growers Association Rodney Weinzierl echoed similar sentiments.
“The things with Asia,” Weinzierl said. “Is it in the U.S.’s interest to have China dominating their policy objectives in a region of the world that has the highest populations and are right now really good U.S. customers?”
A longshot possibility for the Trans-Pacific Partnership is to push China into a free-trade agreement with the United States. The 12-country deal isn’t exclusive and allows room for other countries to later join.
If that happened, the Trans-Pacific Partnership would become an even sweeter deal for American agriculture.
While the countries in the deal combined to import $165 billion worth of key U.S. agricultural goods since 2010, China alone imported a total of about $86 billion during that span, including $14.6 billion of soybeans alone in 2014, according to export data.
China currently has free trade agreements with Pakistan, Chile, New Zealand, Iceland, Korea and several other countries, according to the China Free Trade Agreement Network. It’s negotiating or considering nearly a dozen new free trade agreements, as well.
When asked whether he believed Congress would ultimately approve the deal, Weinzierl said he’s hopeful, but not overconfident.
“It’s a really, really good question,” he said.