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Wednesday, January 23, 2019

Trans Pacific Partnership exists minus the US and Trump pull out harms American farmers


The version of The Apprentice in Washington, D.C., right now — with The Donald himself facing questions about his loyalty to the country, the shutdown and collusion with Russia — airs daily on nearly every cable-news channel.
Meanwhile, Trump’s policies, many of them declared via executive order, continue to have real-world effects. Nowhere is this truer than with his January 2017 memorandum pulling the U.S. out of the Trans-Pacific Partnership, a long-negotiated 12-nation trade pact that would have comprised some 40 percent of global GDP and was largely designed to counter China’s growing economic strength and disregard for the rules of international trade.

Most Americans might not realize it, but the TPP didn’t go away when the U.S. pulled out. The remaining 11 nations — including Australia, Canada, Japan, Mexico, New Zealand and Singapore — ratified the pact, easing investment restrictions, slashing tariffs on agricultural and industrial imports, and strengthening intellectual property rights.

Without the U.S., what is now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership is not nearly as large (now 13 percent of world GDP) or as powerful as it would have been. But it has succeeded in eliminating trade barriers across the board in an economic bloc of some 500 million people, and will give all 11 members far more leverage in negotiations with China.

And the CPTPP is set to grow even larger. The U.K., South Korea, Thailand, Columbia and Indonesia have all expressed interest in joining the pact, which held a meeting in Tokyo this weekend to discuss plans for expansion.

This alone would be bad news for U.S. farmers, manufacturers, the oil and gas industry, and just about anyone in America who exports their products. But coupled with Trump’s tariffs against China — the world’s second-largest economy — the pain is magnified for U.S. producers and consumers alike.

Nowhere is the pain more acute than on smaller, family-owned farms. As the Texas Farm Bureau has pointed out, U.S. farmers don’t want more subsidies but “strong markets and fair trade deals when selling products to foreign buyers.”

It didn’t make headlines, but at the recent American Farm Bureau Federation convention in New Orleans delegates from across the country “voted to favor negotiations to resolve trade disputes, rather than the use of tariffs or withdrawal from agreements,” according to the TFB. Moreover, they voted in favor of U.S. entry into the CPTPP and urged lawmakers to ratify the new U.S-Mexico-Canada Agreement as soon as possible.

While campaigning for the presidency, Trump called the TPP — a trade pact that was by no means perfect but had been painstakingly negotiated by U.S. trade representatives since 2010 — a “disaster” that was being “pushed by special interests who want to rape our country.” Would the president include American farmers among those “special interests”?

It’s time to end the incendiary rhetoric and return the U.S. to its hard-won role as a founding leader in multilateral trade agreements. Recent reportsthat the Trump administration is considering loosening or eliminating tariffs against China as an incentive to close a deal by March 1 are welcome signs of progress, and we hope those arguing for such a course win out.

Yet even a strong bilateral deal is not the ideal solution. 

Robert Zoellick
As former U.S. Trade Representative Robert Zoellick told us last week, because we’ve opted out of the Trans-Pacific trade pact, “U.S. producers —and especially U.S. farmers and ranchers — will face higher barriers than CPTPP members. Australia and Canada, for example, will have a cost advantage in Japan’s agricultural market.”

But there’s something even greater at risk here — America’s foundational role in the international trading system. As Zoellick explained, “Without U.S. leadership, the system is likely to fail to adapt to a changing economy. The usual frictions are more likely to escalate. Risks to the international ‎economy will increase, especially at times of stress because of financial or geopolitical tensions. The U.S.’s greatest strength has been its ability to build coalitions and institutions that reflect U.S. interests and values.” By turning away from these trade pacts and alliances, Zoellick said, “we risk undermining our own heritage.”

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