Trade agreements are fundamental to both expanding exports and global economic development and are critical to the long-term profitability of U.S. agriculture, U.S. Grains Council (USGC) Chief Economist Mike Dwyer told leaders of the International Trade Commission (ITC) at a Tuesday examining the economic impacts of trade agreements.
Dwyer was testifying on behalf of the Council and the U.S. grains industry before the Commission, an independent federal agency charged with providing analysis on issues related to international trade. The hearing this week was one part of an investigation requested by Congress into the impacts of trade pacts over the last 30 years.
The United States has negotiated these agreements with 20 countries since the end of World War II, including that which established the World Trade Organization (WTO). They have helped open U.S. markets and have contributed to the strong growth in agricultural exports; in calendar year 2014, U.S. agricultural exports to these countries accounted for 41 percent of total U.S. ag exports, according to USDA data.
Dwyer described to commissioners how the North American Free Trade Agreement (NAFTA) and free trade agreements with five Central American countries and the Dominican Republic (CAFTA), Colombia and Korea have helped maintain the United States’ competitiveness around the globe.
These countries are among the largest markets for U.S. corn, barley, grain sorghum and co-products, with U.S. exports of coarse grains and co-products to current free trade agreement partners accounting for 42 percent of worldwide exports in 2014, according to USDA data. Add in the Trans-Pacific Partnership (TPP) countries with which the United States does not already have agreements, and that figure climbs to more than 60 percent.
“While we have been reaping the benefits of these trade agreements, U.S. agriculture also risks being left behind as other countries agree to preferential agreements that lower tariffs between themselves but leave barriers in place for U.S. exports,� Dwyer said. “Today, there are more than 260 trade agreements in place around the world, and the United States is only signed on to 20 of them.�
To take advantage of emerging export opportunities—and to maintain the United States’ competitiveness—trade liberalization must occur at all levels including bilateral, regional and multilateral.
“If we want to continue to sell our products to the 95 percent of the world’s customers outside our borders and the 80 percent of the global purchasing power they represent, we will need to continue to aggressively pursue trade negotiations such as TPP, the Transatlantic Trade and Investment Partnership (T-TIP) and multilateral trade negotiations through the WTO,� Dwyer said.
Trade agreements hold the key to opening the markets and resolving tariff and non-tariff barriers to allow the movement of coarse grains, co-products in all forms and other agricultural exports where they are demanded, Dwyer testified.
“An essential part of the Council’s work is helping our trading partners realize they can utilize reliable U.S. grain supplies to advance food security through trade while focusing their resources elsewhere within their growing economies,� Dwyer said.
USGC’s full testimony to the Commission is available here. More information about the TPP agreement is available in past Global Update stories here.