A Few Thoughts by John Nalivka: Let’s simplify the discussion of trade to free and fair
March 16, 2018
I don't think anyone, myself included, has not made the statement that the export market will be key to red meat prices in 2018 with the production increases expected this year. While that comment is pretty non-threatening, the trade policy to achieve those growing exports can often be quite contentious. This has become particularly true this year for anyone talking trade.
Trade is a complex topic. It creates economic benefit not only to consumers and also American industries, but also, most importantly – Americans. And I think that is the key to sound trade policy – negotiating strong trade agreements that are free, fair, and reciprocal in how both parties on either side of the negotiating table are treated. Certainly, it can be a double edged sword with regard to consumers as it affects prices paid for goods but those trade agreements, but also American jobs. Speaking to meat industry clients across the supply chain, I often comment that the economic welfare of the industry rests on both the consumer's willingness and ability to buy your product. That ability rests on consumer incomes and those consumer incomes depend on good paying jobs.
We shouldn't just put the blinders on and look no further than our own industry and what's good for prices, but also think about that same consumer's ability to buy your product. As trade has moved from bilateral to multilateral agreements with layer upon layer of negotiation, one has to begin to ask who are the winners and losers when the ink on the final document dries. And, even more so, how would you even begin to sort that out in a 5,000, 10,000, or 15,000 page document?
I recall when I worked in Washington, D.C. in the mid-1980s, I rode to work with one of the USDA trade negotiators who at the time was involved in the negotiations with Japan to lift the import quotas on U.S. beef, oranges, and orange juice going into Japan. A final agreement was finally reached in 1988. It was highly successful and represented a significant step forward in opening up the Japanese market for U.S. beef. In 2017 of this year, U.S. fresh, frozen, and chilled beef and beef variety meat exports totaled $7.1 billion and Japan accounted for 25 percent of that total. This is real momentum since that 1988 agreement was signed with Japan.
While that bi-lateral negotiation to reach that final agreement was not necessarily easy, it was far more attainable than the Trans Pacific Partnership multi-lateral negotiation that began 20 years later – at least in my way of thinking. At the same time, the U.S. trade balance remains in the red as it has for 40 years. The goals has to be negotiating fair and balanced trade agreements that will contribute toward a strong and growing U.S. economy with solid job growth.