Trade

June 23, 2016

Hello everybody out there in farm country. This radio commentary is brought to you by John Deere and the National Corn Growers Association. They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America. Thank you.

And now for today’s commentary—

Today, I want to concentrate on trade. We are in the process of negotiating a trade agreement with the European Union. We have just completed an agreement with 11 other countries (the Trans Pacific Partnership – TPP). That agreement now needs to be approved by the countries involved. Let’s not forget that President Obama has established diplomatic relations with Cuba after 50 years which could open up new trade opportunities.

First, let’s consider the prospects of reaching an agreement with the European Union. The U.S. runs a huge trade deficit with Europe while we run a big agriculture trade surplus with the rest of the world. That tells us something about European trade barriers. On average, they have a 30% tariff on our ag products. That has to be knocked down. Tariffs are only part of the problem. They have always used non-tariff barriers to block our exports. I remember when I was Secretary of Agriculture they closed the door on all of our meat exports to Europe. They said they had to inspect all of our processing plants for food safety. After two years, they agreed to approve six plants for export to Europe. They were all horse meat plants. The French couldn’t get enough horse meat.

That said, to me the most difficult barrier is the European rejection of GMO crops and food. The European countries ignore science even though the European Food Safety Authority certified the safety of GM crops. In a lunch with former Agriculture Secretary Clayton Yeutter this week, we both agreed that a trade agreement with Europe will not be easy. 

Turn the page to the Trans Pacific Partnership trade agreement which is completed. Unfortunately, Donald Trump and Hillary Clinton are both dead set against it. The chance of our Congress passing it before the November election is next to zero. After the election – we shall see.

U.S. Trade Ambassador Michael Froman warns that “if we get an agreement, it’s not just what we stand to gain; it’s what we stand to lose if we don’t get one. Other countries are moving ahead. They’re not waiting around for us.”

Turning to Cuba, let me just say we sold some soybean oil and bought some coffee. But what we really want are those Cuban cigars.

We can’t take the trade wall down without legislation. I am optimistic that we will get that.

If you would like to review my radio shows going back more than 20 years, just go on-line to www.johnblockreports.com. Have a great weekend.

Until next week, I am John Block from Washington, D.C.