Trade disputes have caused sharp economic pain for American farmers and ranchers slapped with retaliatory tariffs in the short term.
But alongside changes to global production and market shifts to account for the disruption caused by tariffs, the U.S. is in danger of suffering long-term harm if the trade war it now finds itself embroiled in continues much longer, a panel of experts told a symposium of farm and commodity interests Tuesday evening.
The symposium, jointly hosted by the University of Nebraska-Lincoln’s Clayton Yeutter Institute of International Trade and Finance and the Farm Foundation, focused on the overlap between global economic growth and agricultural trade.
Since the millennium, worldwide agricultural production has increased from 2.1 billion metric tons per year to a projected 3.1 billion metric tons this year, said Luke Chandler, chief economist of Deere and Company.
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Much of the growth has come outside North America, in regions such as Eastern Europe, including Russia, Ukraine and Kazakhstan, which has become the top wheat exporter globally. Meanwhile, Brazil has increased its corn and soybean production since 2000, threatening to become one of the world’s biggest grain exporters in both.
Chandler said further foreign and private investment into Brazilian infrastructure could grow its capacity by an additional 9 million acres in the next five years, while at the same time, amid an outbreak of African swine fever in China, the Asian giant decreased its demand for imported soybeans.
Large soybean-producing countries will be “fighting for more share of a plateauing market pie,†Chandler told the audience.
There is still an avenue for the U.S. to find new commodity markets overseas. While 1 out of every 3 acres of crops grown goes to foreign markets now, growing populations in countries with limited food-producing capability, such as Indonesia, could increase demand for U.S. goods — if trade negotiators act quickly.
But after withdrawing from the Trans-Pacific Partnership in 2017 to focus on bilateral trade agreements, America is coming up on a decade of not having signed any new free trade deals, said Richard Crowder, a former U.S. chief agricultural negotiator and professor of agricultural trade at Virginia Tech University.
And with the average bilateral trade talks lasting longer than four years, Crowder said, there’s little hope bilateral trade deals will open up new markets for U.S. producers quickly enough to alleviate the economic pain many are feeling.
Darci Vetter, a Nebraska native and also a former U.S. chief agricultural negotiator, said America’s retreat from forging new agreements also diminishes the country’s influence on global trade policy.
“The United States not only used to be more aggressively negotiating new free trade agreements with other countries,†Vetter said, “but we were continually creating new benchmarks with every deal we negotiated. We set new trade policy.â€
In a 2003 free trade agreement with Chile, for example, the U.S. secured fully enforceable labor and environmental standards that became a baseline to other trade deals signed around the world since, even if the U.S. wasn’t a party to those agreements, Vetter explained.
Other deals dating back decades pushed American influence onto the world into what Vetter referred to as “exporting our way of doing business.â€
Along with opening new markets for U.S. agricultural goods, the former diplomat in residence at UNL said, the Trans-Pacific Partnership would have set policies governing the movement of data between countries, intellectual property protections, and enacted disciplines for state-owned companies.
Those protections were crafted with the idea China would one day join the Pacific trading bloc, potentially helping curb some of the behaviors that have led to the current trade war, according to Vetter.
“I think we could be using our negotiations with China as an opportunity to lead and to bring our allies with us, but instead, we chose to pick a bilateral fight with a huge economy that now has an opportunity to play us off against other allies who are equally frustrated with China’s behavior,†Vetter said.
That appears to be happening, as Europe and Japan, uncertain of U.S. tactics or commitment to sustainable trade agreements, have also backed away.
Crowder, answering a question about whether or not the U.S. can regain its market share for certain grain commodities from Brazil or the Black Sea region, wasn’t optimistic about the outcome of the trade war between the U.S. and China, now entering its second year.
“You never get it all back,†he said. “The longer it goes on, the less you’ll get back.â€