Audio Series Explores How And Why Trade Agreements Work

A four-part audio series from the U.S. Grains Council (USGC), recently distributed through the National Association of Farm Broadcasting’s (NAFB’s) News Service and available online, explores the complex process of crafting trade agreements as well as why the work is worth the effort over the long-term for U.S. agriculture.

The most obvious benefit to a trade agreement is market access, which opens the door for the sale of U.S. feed grains and related products and helps set the price for those sales. The price of U.S. grains received by U.S. farmers and agribusinesses is directly connected to trade policy, and changes in policies by the United States or its trading partners can lead to market movements.

“Changes in trade policy have to be adjusted in price – at least in the short- to medium- run – to clear the market,” said Cary Sifferath, USGC senior director of global programs. “The market has to adjust price-wise and then look to find alternative markets – both domestically and internationally – for those products to move to.”

Trade agreements can provide the structure to prevent such actions from hindering market access, making the deals vital to U.S. agriculture.

Yet, trade agreements can be challenging to achieve. All sides must be ready to engage in trade issues, and once a negotiation is finished, the agreement must be approved by all countries that are party to it. Only then will farmers begin to see the benefits.

“Both sides understand that there is an economic gain, a national security interest, geopolitical interests – those usually form the building blocks of the desire and willingness for both parties to engage,” said Floyd Gaibler, USGC director of trade policy and biotechnology. “For instance, because the Administration officially notified the U.S. Congress for the [U.S.- Mexico-Canada Agreement], that triggers a whole series of processes. It’s a long process, it’s a prescribed process.”

Of course, the benefits of trade agreements go far beyond the sale of goods. Good relationships with trading partners help each country understand the industries of the other.

“You always like doing business with people you know, and world trade is no exception to that rule,” said Tom Sleight, USGC president and chief executive officer. “Trade is a two-way street, and it’s something that we need to protect at all times. The main part is always being there for our partners as a resource, as a bridge to U.S. agriculture.”

Future potential trade agreement partners, including countries in Southeast Asia, provide even more opportunities to realize these benefits as the region’s economic growth offers large market and geopolitical gains.

“We want to be able to participate in the strong economic growth we’ve seen and changes in per capita meat consumption that have driven growth, the changes in fuel consumption and concerns for biofuels that can be negotiated through trade agreements,” Sleight said. “We can see expanded market presence, expanded market access and expanded sales – that’s the bottom line with all these trade agreements.”

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