There are several ways the United States is losing by focusing on a nationalist trade agenda and balancing trade in every way, says a former U.S. chief agriculture trade negotiator.
Why it matters: American policy has had an impact on Canadian agriculture trade in commodities from pork to soybeans.
Vetter explained that before the trade deal with Japan, the U.S. exported $14.6 billion worth of agriculture goods to that country. A total of $5 billion was already duty free. That left $9 billion that wasn’t duty free yet.
Out of the trade deal the U.S. can now export $7.2 billion more in agriculture goods duty free.
Why that number?
Vetter says that’s exactly what the U.S. gave up in industrial goods access – $7.2 billion. If there wasn’t such a focus on equality, they might have been able to get more agriculture access. It also doesn’t set the deal up for changes in the market.
“The concept of reciprocity underlining U.S. trade negotiations is very limiting,” she said. “The relationship today has very little resemblance to the relationship tomorrow.”
The goal used to be to entwine economic systems and grow together.
“The approach we are taking is very limiting and I hope it is not something folks emulate particularly in agriculture where our markets are very dynamic.”
Vetter is concerned that the move away from global-level deals, like the World Trade Organization, will reduce opportunities for growth and increase environmental impact as food is produced where it has more environmental impact.
There are three main areas where the U.S. is limiting trade, according to Vetter.
The first is imposing tariffs to protect national security under Section 232, which Canada knows well due to steel tariffs. The second is to address unfair trade practices, the basis of the trade war with China and third, allowing the World Trade Organization’s dispute resolution mechanisms to wither away.
The World Trade Organization is important to keep world trade from disarray, says Vetter. The U.S. can claim that 40 per cent of its agriculture exports go to close countries like Canada and Mexico, under bilateral or trilateral trade deals, but Vetter says that leaves another 60 per cent that would be impossible to police without World Trade Organization rules.
“There’s no way we could individually compel them into better or more certain behaviour,” she said.
Confounding the whole trade war business is the fact that something does need to be done about China, says Vetter.
There’s overwhelming support for taking on China’s trade practices among Americans, but that also means that a debate about the tactics being followed is difficult. Better than going alone against China, would be to engage allies around the world.
She also questioned whether the U.S.’s policy on China is totally based on economics, or if there’s a commitment to democracy and the rule of law in American policy too.