U. S. farm exporters are relieved that trade has finally made it on to President Barack Obama’s agenda, although his new goal to double U. S. exports in five years might be a little too optimistic.
After a year when farm expor ters wondered aloud whether the administration even had a trade policy, Obama linked export growth to job growth. He also promised an initiative to address deep distrust many Americans hold toward trade pacts, viewed as sapping manufacturing jobs from the United States.
“My hope is that we can move forward with some of these trade agreements having built some confidence … among the American people that trade is going to be reciprocal, that it is not just going to be a one-way street,” Obama said Jan. 29.
Obama proposed a 20 per cent budget Feb. 1 increase to the Commerce Department’s International Trade Administration to $534 million to launch the export drive.
The Agriculture Department budget included $54 million to develop foreign markets and work to remove trade barriers. That spending would be offset in part by a $40-million cut in a program to boost sales of high-value U. S. farm goods overseas.
Commerce Secretary Gary Locke is expected to give more details this week about how the administration plans to double exports, a pledge Obama made in his state of the union speech.
The initiative will include creating an export promotion cabinet, enhancing funds for export promotion, and giving small-and medium-size businesses more help in exporting, said Carol Guthrie, a U. S. Trade Representative spokeswoman.
GOAL WITHIN REACH?
Trade analysts praised the goal to double exports but said it may not be achievable.
Total U. S. exports were worth $1.827 trillion in 2008, and for the first 11 months of 2009 reached $1.411 trillion.
Farm exports hit a record $115.3 billion in 2008 but are forecast to fall to $96.6 billion for 2009. About 25 per cent of total U. S. farm production by volume is sold abroad.
Growth in exports will depend more on a weak dollar and a strong economic recovery than other factors, analysts say.
“You’ve got to have a real undervalued dollar, or some incredible macroeconomic growth around the world,” said Gary Blumenthal of Washington consulting firm World Perspectives.
But a cheap U. S. dollar is not part of the export strategy, Locke told Reuters.
“We are not counting on the low value of the dollar in order to achieve this goal,” Locke said.
For agricultural exports, demand will increase as world economies recover, lifting prices, said Jim Grueff, a former trade negotiator with the U. S. Agriculture Department.
“What we always talk about are the huge, affluent middle classes. If those start to come back, I would say there’s some possibility (to double farm exports), but I would not say it’s probable,” said Grueff, managing partner of Decision Leaders.
“We are not counting on the low value of the dollar in order to achieve this goal.”
– U. S. COMMERCE SECRETARY GARY LOCKE
Some growth could also come if U. S. officials convince importers to remove trade barriers. For example, they have urged Russia to stop blocking U. S. poultry and pork because of concerns about chlorine treatments and antibiotic residues.
FREE TRADE PACTS
Another big boost for U. S. farm exports could come if Congress were to pass trade agreements negotiated by the former Bush administration with Panama, Colombia and South Korea.
The deals would mean about $3 billion in additional U. S. farm exports, the American Farm Bureau Federation estimates.
Obama mentioned the pending free trade deals last week, but stopped short of saying he would take them to Congress, where many Democrats remain staunchly opposed.
“The question now is, what’s their legislative strategy to move ahead” with the trade agreements, said Ellen Terpstra, a former top farm trade official from the Bush administration.
The longer ratification takes, the more ground is lost to competitors like the European Union and Canada, which have pushed ahead with their own free trade pacts, Terpstra said.
While the timeline for the pacts may be unclear, farm groups said Obama’s emphasis on exports is a good omen.
“We’re happy to see that trade finally made it on to the radar screen,” said Rebecca Bratter, policy director with U. S. Wheat Associates.
“It’s the first time we’ve heard him mention these agreements … by name,” she said.
Senator Blanche Lincoln, chairman of the Agriculture Committee, and 17 other senators urged Obama to submit the deals to Congress.
“With your support , we believe we could pass these agreements yet this year,” the senators said in a letter.
It will be tough for the United States to negotiate greater access to additional markets unless it shows more willingness to lift some of its own barriers, said Robert
Thompson, an agricultural economist at the University of Illinois.
“Trade is a two-way street,” Thompson said, noting the United States has failed to live up to some of its own trade obligations even when the World Trade Organization has ruled against policies such as subsidies for cotton.