Putting trade on the fast track

Posted April 30, 2015

International trade policy negotiations are time-consuming, complex and extremely controversial. But, the resulting trade agreements can remove trade barriers and put Kansas farmers on a level playing field with their competitors around the world.

Negotiations between two nations can take a long time. For example, the free trade agreement between the United States and Colombia, a top hard red winter (HRW) importer, took nearly six years from when it was first signed before it was officially implemented. Bring even more countries to the negotiating table and the time needed to pencil out a comprehensive agreement exponentially increases.

The United States is currently pursuing two of those multi-nation trade agreements. The Trans-Pacific Partnership (TPP) would establish a regional trade agreement in the Pacific Rim, while the Transatlantic Trade and Investment Partnership (TTIP) would remove trade barriers with countries in the European Union. According to the Office of the U.S. Trade Representative, these two agreements encompass 65 percent of the world’s trade in goods and services and 69 percent of U.S. exports.

One sticking point, however, is a federal legislative procedure called trade promotion authority, commonly referred to as fast-track. This tactic is not a new concept, having been enacted periodically since 1974, but it is a very controversial one.

In the most basic sense, trade promotion authority works like this: Congress outlines trade policy priorities, negotiating objectives, transparency requirements and much more. These guidelines are given to the Executive Branch. The Office of the U.S. Trade Representative (USTR) can then negotiate the trade agreement per these rules – a tricky process that includes 12 countries in the case of the TPP. Once the negotiators have finalized the agreement, it goes back to Congress. Members of Congress can then vote to accept or reject the agreement, but without amendment. This is a crucial component of trade promotion authority because it reassures trading partners that the United States will stick to the agreement as it is negotiated, without last minute changes that would then have to be negotiated all over again by the other 11 countries in the agreement.

This lengthy process still provides members of Congress, U.S. trade negotiators and stakeholders extensive opportunities to submit input, objections and suggestions. And the U.S. wheat industry is actively involved on both the domestic and international fronts.

In Washington, DC, the National Association of Wheat Growers educates members of Congress on the importance of trade to the U.S. wheat industry. For Kansas, wheat exports alone were worth more than $1.5 billion in 2013. With domestic wheat consumption relatively stable, the largest potential growth lies in developing markets with rising middle classes – like those in Southeast Asia that are included in the TPP. However, these agreements also include some of the most stable customers, like Japan, where wheat is a very politically sensitive crop.

As the industry’s market development association, U.S. Wheat Associates works with USTR to identify trade barriers that the TPP and TTIP agreements could reduce or remove in order to further help Kansas farmers reach those markets. This is particularly important for wheat farmers as other major exporting countries like Canada and Australia are negotiating their own trade agreements.

For example, Canada implemented a free trade agreement with Colombia while a similar agreement languished in the U.S. Congress. During just the 10-month gap between the Canadian wheat farmers enjoying duty-free access to the Colombia market and implementation of the U.S.-Colombia free trade agreement, overall U.S. wheat sales dropped 45 percent year-on-year. Sales have resumed, but the impact shows the power a trade agreement can yield.

For all these reasons, the U.S. wheat industry is unified in its support of trade promotion authority as a means to negotiate – and complete – comprehensive trade agreements. As published on the U.S. Trade Representative website, “With Trade Promotion Authority, the United States will be able to pursue 21st century trade agreements that support and create U.S. jobs while helping American manufacturers, service providers, farmers and ranchers increase U.S. exports and compete in a highly competitive, globalized economy.”

Find more information on trade promotion authority and the wheat industry’s work on trade policy issues at www.wheatworld.org/trade or http://www.uswheat.org/policy. 

by Julia Debes

 

Infographics from the Main Street Growth and Opportunity Coalition.