Editorial: Trade advocacy faces tough views

by Morton Sosland
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Morton Sosland
Morton Sosland

While wanting to avoid diving into issues that were debated in this year’s presidential campaign in America, one matter that has friends and foes in the two parties is particularly important to grain-based foods. The issue involves the pros and cons that are being introduced in support of or in demonizing international trade and its impact on the American economy. This is also a matter that does not have universal support across grain-based foods nor is it widely criticized even by those segments farthest removed from its effects. This page has long supported trade agreements that open foreign markets for the sale of wheat and flour, while recognizing that their effect is not faultless.

Several international agreements currently are being considered by possible signatory nations and these are sources of much anti-trade rhetoric. Indeed, these lengthy negotiations along with the related need for gaining approval of legislative bodies like the U.S. Congress have helped make specific trade issues a source of intense debating. One is the so-called Trans-Pacific Partnership that would extend many of the provisions of the North American Free Trade Agreement (known widely as NAFTA). Another involves North Atlantic trade, which historically has been quite open, and still another involves trade relations between the countries of the Western Hemisphere.

While any number of provisions in each of these negotiations could be argued about, it is the overall concept of trade agreements between nations that needs defending at this time. Much of the most bitter arguing centers on whether trade is beneficial to national economies, a matter that world history answers with a resounding affirmative. It is this aspect that fits most neatly into explaining how advantages are created for every part of grain-based foods, even for those segments where serious questions may be asked about attributes.

Convincing evidence in favor of trade emerges when examining various sectors of grain-based foods. Wheat producers, who have experienced sharp price setbacks due in part to America’s lack of competitiveness in foreign trade, have the greatest incentive to press for agreements that would further open foreign markets. Similarly, the companies that distribute and market wheat and other grains, either by trading or by shipping, have a similar positive stake. Negotiations that have written an end to export subsidies have helped facilitate trade based on market moves alone. American millers at one time enjoyed foreign markets for a large share of output, but currently enjoy little export business beyond the home continent.

And then there are the food manufacturers, mainly bakers that do not participate in foreign trade with a few exceptions. Here, anti-trade arguments arise from the effect of trade on the cost of grain-based ingredients, such as the current market that has improved margins by lowering ingredient costs but threatens the opposite should exports start to climb. The case convincing the food industry about the positives from trade expansion rests on realizing that the export potential serves as a spur to crop production significantly larger than needed for domestic use alone. Such production levels give bakers a much broader selection of growing areas and crop types from which to select ingredients than would be available if grain production was a fraction of current totals. The reality of this situation is evident in the way U.S. wheat plantings have fallen due to weak prices, while export activity has spurred outturns in the Black Sea region.

Now that negotiations of a new international trade agreement under auspices of the World Trade Organization have almost ended, the line of attack against trade targets areas where dismal economies are blamed on prior trade pacts. Even if agricultural and food issues will not be front and center in international negotiations that may shortly start, it is essential for industries like grain-based foods to be a strong advocate for trade liberalization. It offers one of the best pathways to improving each industry sector.

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