While the United Stated has an agriculture sector trade surplus with the world, the U.S. has a trade deficit in agriculture trade with one region of the world: Latin America. Now President George W. Bush has announced that his number one trade priority is to expand the North American Free Trade Agreement (NAFTA) to 31 more countries through Latin America and the Carribean. Incredibly, Pres. Bush is insisting on this NAFTA expansion even though a 2000 U.S. Department of Agriculture (USDA) report found that this proposal would increase the U.S. agriculture trade deficit with the region.
The Bush Administration is asking Congress to delegate away its constitutionally-granted exclusive control of trade policy and give President Bush “Fast Track” trade authority. Fast Track delegates away to the Executive Branch in one lump sum three different rights: the ability to not only negotiate, but sign a trade agreement before Congress votes on it; the ability to write the legislation changing U.S. laws to conform with the often-hundred-plus page agreements; and the guarantee that Congress will consider this legislation under extraordinarily restrictive procedural rules. Under Fast Track, Congress has 90 days to vote “yes” or “no” on the trade agreement and the legislation presented to it by the President with no amendments allowed and debate limited to 20 hours.
President Bush is demanding this blank check trade policy-making procedure because he wants to be free to take U.S. trade policy where Congress and the public do not want to go: more NAFTAs! The 31 country NAFTA expansion is formally called the “Free Trade Area of the Americas” or FTAA, but we call it NAFTA on steroids!
While the United Stated has an agriculture sector trade surplus with the world, the U.S. has a trade deficit in agriculture with the FTAA/NAFTA expansion nations caused by huge wheat, soy, beef and produce production in South America. There is no market for more U.S. agricultural export products in the FTAA countries because plentiful supplies of wheat, soy and beef can be grown more cheaply in places like Brazil, Argentina and Uruguay. The same applies for fruits and vegetables grown in Chile and Central America. Indeed, the 2000 USDA report on FTAA concludes that each year of FTAA, U.S. agriculture export growth would decline and import growth from the FTAA countries would increase – causing an ever-deepening U.S. agriculture trade deficit with the FTAA nations.
Brazil, Argentina, Uruguay, Chile and other major agricultural producing nations have been very clear: their only interest in FTAA is to obtain U.S. market access for their agriculture goods.
First, these countries want to expand the NAFTA rules which create an incentive for food sold in the U.S. to be produced using pesticides banned in the U.S. and poverty-wage farm laborers. Under these NAFTA rules, we have already seen U.S.-based corporate fruit and vegetable operations relocate to Mexico to increase their profits by using chemicals forbidden in the U.S. and $3-a-day labor.
Second, they want the U.S. to guarantee that Congress will not provide subsidies (including those paid for setting aside land for conservation purposes) or even emergency bailout payments during droughts and other crisis to U.S. farmers. The big Latin American ag export countries also want the U.S. to gut its domestic fair trade laws, which are used to stop dumping of agriculture products on the U.S. market.
We know what this sort of agriculture trade model means for producers and rural America. The promises to U.S. farmers that NAFTA and the global WTO deal would allow them to export their way to profitability have failed to come true. Indeed, the crisis in rural America has deepened.
According to the most recent available data from the U.S. International Trade Commission (USITC), the trade balance for many agricultural goods is worsening, especially for hard hit products like fruits and vegetables. However, even for stronger exports like grain, the balances are declining with agriculture products that had trade surpluses seeing their trade balances decline during the period NAFTA and the WTO have been in effect, along with a slide in ag-related rural businesses and jobs.
- The poultry industry trade surplus fell 14% between 1995 and 1999, cutting 4% of establishments and 8% of jobs.
- The cattle and beef sectors $21 million surplus fell to a $152 million deficit in 1999.
- The grain and cereals surplus has slid by a third since 1995, the oilseeds surplus has fallen 17% and the animal and vegetable oils surplus has been cut in half.
Meanwhile, some sectors have gotten clobbered. The $18 million fruit and vegetable juice surplus that existed in the period before NAFTA and the Uruguay Round of the General Agreement on Tariffs and Trade has become a $48 million-plus deficit.
- The fresh, chilled and frozen vegetables industry has lost 14% of its establishments and 11% of its workers between 1995 and 1999 and this vegetable trade deficit grew from $438 million in 1995 to a deficit of more than $1 billion in 1999.
- The fresh fruit sector lost 8% of its establishments and 4% of its jobs and the fresh fruit trade deficit grew from $127 million in 1995 to $469 million in 1999. The frozen fruit trade sector changed from a $9 million surplus in 1995 to a $37 million deficit in 1999.
If this data is a surprise to you, perhaps it is because the Bush Administration and the one before it tend to only count gains in exports – never factoring in the huge growth in imports – when discussing agricultural trade flows. If you consider the whole picture, you will see that U.S. producers’ farm income is declining even when exports grow or they produce more volume because the flood of agricultural imports is bringing down commodity prices and eliminating farmers’ profit margins.
Moreover, U.S. attempts to protect its domestic agricultural sector from cheap imports has come under attack in trade agreements. International trade dispute cases and threats to U.S. laws that protect domestic industries from surges in imports through safeguards and countervailing duties have been common. According to a recent document from the office of the USTR, nearly half of all highlighted WTO disputes in which the U.S. is a defendant are over anti-dumping laws. Indeed, 11 of the 23 active and highlighted cases (48%) are over such issues. If this were not bad enough, Chilean and Brazilian officials have stated that the U.S. anti-dumping law must be changed as part of the FTAA and the top U.S. trade negotiator responded that U.S. anti-dumping law was “on the table.”