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There’s no such thing as a free lunch — or free trade

We in U.S. agriculture talk about free trade agreements as if they are the international equivalent of a free lunch.

This lovely belief, of course, overlooks the absolute certainty that there is no such thing as a free lunch. Someone somewhere always pays.

More often than not, that someone over the last 25 years has been the U.S. and its farmers, claims new research from the Agricultural Policy Analysis Center (APAC) at the University of Tennessee.

In the lead-up to the Obama administration bringing the Trans-Pacific Partnership to Congress, APAC’s Daryll E. Ray and Harwood D. Schaffer penned a series of columns that examined the effects of seven recent American “free” trade deals on U.S. farm and food exports and imports.

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For example, when Ray and Schaffer squared the books on ag trade with Canada under the North American Free Trade Agreement, they found that the “cumulative balance of trade” for the U.S. goods from 1997 to 2014 “was -$30.4 billion.”

That means Canada sent $30.4 billion more in ag goods — grains, meat, animals, fish, wood, and fur — south than America sent north under NAFTA once the 1994 deal was fully implemented.

Likewise, Mexico sold the U.S. $9.6 billion more in food and farm goods over the same 18-year period than the U.S. sold Mexico.

In total, they noted, NAFTA brought nearly $40 billion more Canadian and Mexican farm and food goods into the U.S. between 1997 and 2014 than the U.S. shipped to Canada and Mexico.

This isn’t breaking news; anyone who can read knows that NAFTA has been far more beneficial to international agbiz that works both sides of the border than farmers and ranchers who work on either side. What continues to be news, however, is that American farm and commodity groups stubbornly refuse to accept that NAFTA — like all trade deals — is a two-way street.

“As the NAFTA results suggest, high expectations that trade deals will accelerate growth in the value of total U.S. agricultural exports don’t always materialize,” Ray and Shaffer wrote.

When they examined other trade pacts since NAFTA, they found that any expectations, high, low or in between, almost never materialize.

For example, overall the 2001 U.S.-Jordan pact is $224 million under water, the 2004 U.S.-Australia deal has netted U.S. farmers a piddling $175 million over 10 years, and the 2006 trade pacts with Bahrain and Morocco collectively are about $90 million in the hole.

The big loser, though, is the 2004 U.S.-Chile pact. In 10 years, Chile has sent the U.S. $24.7 billion in farm goods more than the U.S. sent there.

Overall, these post-NAFTA trade deals have, cumulatively, brought $1.6 billion more of imported food and farm goods here than we exported there.

“While that number is relatively small,” suggest the Tennessee co-authors, “it is likely not the size or direction of the net change that trade agreement proponents would have had farmers believe at the time these agreements were put into place.”

Shorn of its academic niceties, what they mean is that American farmers and ranchers resemble sheep running toward often-promised greener pastures every time politicians and farm leaders ring the free trade bell. Those greener pastures, like the proverbial free lunch, however, rarely “materialize.”

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