By John Stencel
Little media attention has been given to two very significant trade agreements passed into law in the last several months.
First there was the agreement between the United States and Australia, which provided better intellectual property rights for U.S. musicians, filmmakers and manufacturers into the Australia in exchange for reductions and, in some cases, elimination of U.S. tariffs or other restrictions on Australian agricultural products.
The second agreement, which was signed May 28, reduces tariffs and trade barriers between the United States and five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua). This agreement will be particularly damaging to U.S. producers of sugar, fruits, vegetables, and ethanol.
Perhaps the lack of fanfare outside international trade groups when these agreements were signed is due to the reality that increased international trade in agricultural commodities has done nothing to benefit the rank-and-file producer. In fact, many would argue—myself included—that these trade agreements have been detrimental to producers in countries on both sides.
It was not illogical for producers, when government trade negotiators and international commodity marketing firms touted the benefits of increased trade, to believe they would realize financial gain from the swell in exports. What they didn’t know until more than 20 years later is that the additional profits went to the firms who traded the commodities. Opening up market access was very profitable to them. Likewise, being able to buy commodities from producers in these newly-opened countries gave them tremendous power to bargain for lower prices. Last year when U.S. Department of Agriculture Secretary Ann Veneman spoke in favor of expanding worldwide agricultural trade under the guise that it would add dollars to producers’ pockets, she was reprimanded with the facts. Producers today get less for their commodities than they did 30 years ago when international trade in agriculture was far less. Perhaps, this is why these two recent trade agreements have been signed and implemented quietly.
Rocky Mountain Farmers Union supports international trade agreements that support producers, consumers and businesses in both countries. Unfortunately, the Australian and Central American agreements will both be detrimental to U.S. producers, and it is questionable whether or not they will be beneficial to Australian and Central American producers or only to the multinational trading companies that buy and sell the producers’ commodities.
In addition, these agreements do not address the everyday occurrence of currency fluctuation. The Australians have (unofficially, of course) said that they are willing to devalue their currency in order to make Australian commodities more attractively priced in the United States. In the majority of Central American countries, currency fluctuations are significant and frequent. Why be depressed about the weakening of their currency against the U.S. dollar if it means flooding our market with their products?
These recent trade agreements also fail to seriously address differences in labor and environmental standards.
Central American laborers should not expect a better standard of living because of increased exports to the United States any more than U.S. producers have increased their incomes because of increased exports. If the agreement encouraged better pay and safer working conditions for these workers, perhaps they would be able to spend more on goods—perhaps even U.S. manufactured goods. But, the agreement does not address this at all.
Besides being detrimental to the worker, the lower environmental standards south of the border are dangerous to the U.S. consumer. Have we forgotten E. Coli-tainted green onions and Guatemalan berries fertilized with night soil that sickened and even killed Americans?
I fear the U.S. producer has gone from being enthusiastic about increased U.S. agricultural exports to being passive to the rhetoric. I implore the production agriculture community to stay involved with international trade and to speak up for agreements that benefits producers.