Trade uncertainty extends to World Trade Organization standing
San Antonio, Texas -- The uncertainty about trade under the Trump Administration continues to be a concern among farmers who rely on exports, especially during this cycle of low prices.
San Antonio, Texas - The uncertainty about trade under the Trump Administration continues to be a concern among farmers who rely on exports, especially during this cycle of low prices.
First, President Donald Trump pulled out of the Trans-Pacific Partnership and then went on to start the process of renegotiating the North American Free Trade Agreement with Mexico. The latest news would suggest the president and administration want to break from the status quo once again in regards to the World Trade Organization.
The White House claims they want to negotiate trade disputes outside the WTO because the U.S. is not treated fairly, but experts says there's more to it.
"So the reason that we're talking about leaving WTO is because of our stance on NAFTA. If indeed we want to renegotiate NAFTA, the Mexicans will probably walk from the table if we talk tariffs at all. That means that we would go back to the WTO," says Dan Basse, AgResource president.
However, the CEO of the U.S. Grains Council, Tom Sleight, disagrees with the president and says agriculture has done well under the WTO.
"The dispute settlement process has been very important to settle such key issues like on biotechnology access, phytosanitary measures and things like that, so I think it's something we need to be talking a lot more about," he says.
Beyond that, trade disputes already can be negotiated and settled outside the trade organization.
"It's something that we can do under our own U.S. laws. However, if we did that, though, it would be challengeable within the WTO," says Steve Censky, American Soybean Association CEO.
To circumvent that, the U.S. would have to pull out of the trade pact, something the administration has also mentioned. However, the chair of the House Ag Committee says trade agreements are only good if they have enforcement behind them.
"You look at our enforcement action that we've taken against China, where they're spending a $100 billion a year on three crops. We spend $100 billion on our safety net over eight years or so, and so enforcement is a big deal," says Rep. Mike Conaway.
On the issue of fairness, Conaway says the WTO process has been not been biased against the U.S.
"We've won as many cases as we've lost at WTO. It's a court. Obviously losing the cotton case has jammed us up a kind of meaningful way over the last several years, but I don't have a position yet on what they might or might not do with respect to that," he says.
"I think that overall the WTO has been able to work very effectively. If a member of the WTO feels that they are being unfairly treated that there's a process that they can bring a WTO case against the party that's exerting the damage," says Richard Wilkins, American Soybean Association chairman and a Delaware farmer.
Farm groups are also opposed to pulling out of the 180-member trade framework.
"I think it's a disastrous idea. I think it would not serve the United States and certainly U.S. farmers and ranchers very well," Censky says. "If we pulled out of the WTO suddenly, we would have to negotiate new trade agreements with over 180 countries around the world, simultaneously. Those countries could then apply any tariff that they wanted to to our goods." Plus, Censky says under the WTO agreement the U.S. has most-favored-nation status, which means lower trade tariffs with the other countries in the deal.
Basse, who has studied trade for nearly 40 years, says the WTO is the only mechanism available to get China to trade fairly.
"Here today it's going be difficult to negotiate if we're not a member of WTO and it's going to be difficult to hold China, who joined in 2001, accountable because they've already shown on ethanol and DDGs that they're willing to put tariffs in place," he says
So, the ag community is urging the administration to stay the course.
"We need the WTO in terms of a foundation for the rules of trade we need that foundation, that global foundation," Sleight says.