Wednesday, August 9, 2017

Trump's trade policies hard on farmers (or at least on agribusiness)

While some political commentary suggested that many rural Americans were drawn to Donald Trump's candidacy because of his tough stance on trade, it turns out that some rural areas--or more precisely, some types of farmers--may be badly hurt by the ditching of the Trans Pacific Partnership, a trade pact negotiated by the Obama administration.  Politico Magazine ran this big feature a few days ago, "Trump's Trade Pullout Roils Rural America."  The dateline is Eagle Grove, Iowa, where a massive new meat processing plant is being built.  But the story illustrates the risks from the current trade environment to rural America and/or to farmers by reference to an agribusiness enterprise--the one building the Iowa facility, but which is based in North Carolina.  There's actually not much emphasis on individual producers.  Here's an excerpt:  
The gleaming new factory is both the great hope of Wright County, [Iowa] which voted by a 2-1 margin for Donald Trump, and the victim of one of Trump’s first policy moves, his decision to pull out of the Trans-Pacific Partnership.

For much of industrial America, the TPP was a suspect deal, the successor to the North American Free Trade Agreement, which some argue led to a massive offshoring of U.S. jobs to Mexico. But for the already struggling agricultural sector, the sprawling 12-nation TPP, covering 40 percent of the world’s economy, was a lifeline. It was a chance to erase punishing tariffs that restricted the United States—the onetime “breadbasket of the world”—from selling its meats, grains and dairy products to massive importers of foodstuffs such as Japan and Vietnam.

The decision to pull out of the trade deal has become a double hit on places like Eagle Grove. The promised bump of $10 billion in agricultural output over 15 years, based on estimates by the U.S. International Trade Commission, won’t materialize. But Trump’s decision to withdraw from the pact also cleared the way for rival exporters such as Australia, New Zealand and the European Union to negotiate even lower tariffs with importing nations, creating potentially greater competitive advantages over U.S. exports.

A POLITICO analysis found that the 11 other TPP countries are now involved in a whopping 27 separate trade negotiations with each other, other major trading powers in the region like China and massive blocs like the EU. Those efforts range from exploratory conversations to deals already signed and awaiting ratification. Seven of the most significant deals for U.S. farmers were either launched or concluded in the five months since the United States withdrew from the TPP.
Here's a piece on Trump and NAFTA from the AgLaw Blog back in March, 2017.

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