International trade agreements could yield a bright future for U.S. agriculture, according to Ambassador Allen Johnson, of the U.S. Trade Representative's Office. His challenge to U.S. producers who might be anxious about competing in such an environment? Get involved in the process.
Johnson made those comments while on a “Work Days” tour through the Mid-South in September. Johnson is responsible for all U.S. agricultural trade negotiations in the world. The U.S. Trade Representatives office is also responsible for defending or pursuing litigation associated with trade agreements.
“Trade is essential for the United States because U.S. growers over the long haul face a flat domestic market and a growing international market,” Johnson said. “The only way to create opportunities for U.S. agriculture is through trade.
“There are 6 billion people outside this country,” he said. “By the middle of the century, there will be between 9 billion and 12 billion people. Our percent of that in North America is going to shrink. So we want our producers to become more productive every year.”
The purpose of Johnson's tour “is to inform growers about what we're doing in terms of trade policy. These work days give me the chance to get below the veneer and into the substance of what farmers see as the challenges that are facing them. It gives me a chance to tell them what we're trying to do about these challenges.”
Johnson spoke of three realities agriculture will face in the coming years. “There will be more demands from consumers, more demands from society and a more competitive environment, including a globally competitive environment.
“We're focusing a lot on eliminating export subsidies, lowering trade distorting domestic support in higher subsidized countries like the European Union, and lowering tariff barriers. The United States has low tariff barriers, one fifth of what the world's tariff barriers are.”
Puts reform in perspective
Johnson tried to put any potential reform in U.S. policy in perspective for U.S. growers. “I have to be able to come home and justify to my farmers that I'm lowering other people's trade distorting policies and creating opportunities and open markets. If I can't justify that, then I can't agree to it. So we're not going to unilaterally disarm in this process. It has to be everyone reforming together.
“We'll see how far we can get,” Johnson added. “In Geneva, we decided to eliminate export subsidies. That's a big move compared to the Uruguay Round where they decided to only cut them a third.
“In trade distorting domestic supports, we got an agreement that higher subsidizing countries are going to cut more. That means Europe, which has four times (the support) is going to have to cut more than us. Higher tariffs are going to have to be cut more in creating market access opportunities.
“In the domestic sense, we will work very closely with our industries to determine where the opportunities are and what we can do to address them. But we're very realistic that without the agricultural community, you cannot get a free trade agreement through our Congress.”
Anxieties are very high in other countries, too, noted Johnson. “Keep in mind that you have places like India where there are 650 million people in the rural areas. China has 800 million rural people. They are afraid of political and economic instability if they make the wrong policy.
“At the same time, they know that the direction that they're going isn't enough to sustain their population growth. So they know they need to change. At the same time, they're afraid of the changes that they might have to make. Trying to work through those things is tough sometimes.”
Johnson is also making sure the United States has a strong appeal on the U.S. cotton subsidy dispute with Brazil. As to short-term changes in the cotton industry as a result of the Brazilian case, Johnson says, “It's too early to tell. We won several aspects of that case. We think we have a strong basis for arguing that we are consistent with our international obligations, and expect the panel to look at things more our way.
“We'll work with our agricultural community, members of Congress in deciding what steps we want to take — whether we're already in compliance with whatever the decision is and what our options are.
Negotiation or litigation
“It's important to note that our WTO negotiations are going to be going on at the same time,” Johnson said. “We've said all along that this is the best place to reform the agricultural system. Negotiations are better than litigation. Litigation is always time-consuming, expensive and less than clear and never completely satisfying at the end of the day.
“I've found that over the last six months that the Brazilians have been earnest in trying to move the WTO negotiations forward.”
“In order for reform to take place, all participants must feel like everyone is stepping up to the table,” Johnson added. “I feel like we can create wealth through these agreements. We can create economic growth. We can have win-win situations. The process of getting to that point is often difficult.”
Johnson's advice to U.S. growers is to get engaged in the process. “All these issues are not unique to one commodity. The whole agricultural community needs to be a part of this discussion. And the community needs to stay together in trying to pursue this investment in the future.”
Johnson is impressed with the level of preparedness of U.S. producers. “They're coming to the same conclusions about changing their products to meet consumer needs. I have no doubt we can be winners in this, if I can just think ahead.
“There is anxiety, but agriculture has never been easy,” Johnson said. “There's nothing new about that. The reality is that generally speaking, subsidies are a sign of bad times and exports are a sign of good times.
“The alternative is to let a series of random events make us not competitive, and we wake up 15 years from now saying what happened. I don't feel comfortable with that option.”