Benefits of freer trade buried by protectionist rhetoric

These are hard times for free-traders.

Both candidates for the United States presidency are threatening to rip up or renegotiate free trade deals and a tiny region of Belgium may effectively veto the Canada-European Union free trade agreement.

Joe Glauber, former U.S. Department of Agriculture chief economist, has sat through dozens of free trade negotiations during his 30 years in government.

He said protectionism and anti-trade rhetoric is nothing new, but the lack of voices now supporting free trade is worrisome.

“Economists and others should be doing a better job of promoting (free trade). You just don’t see anyone articulating why trade is important. At least in the U.S. you don’t,” said Glauber, who spoke Oct. 21 in Winnipeg at Fields on Wheels, an annual conference on grain transportation.

“It’s easy to pull the anecdotes about the costs of trade…. You can always interview the person who (lost) their job. (But) what about the consumers that have benefitted from lower prices or more access (to products)?”

Glauber, in his speech and in a scrum with media, talked about the prospects for the Trans-Pacific Partnership (TPP), a trade deal between 12 countries including Canada. The U.S. Congress must ratify TPP, or the deal will die. However, American politicians are reluctant to support free trade because it may cost them votes in this fall’s election or in the mid-term elections of 2018, Glauber said.

“TPP I think, as I mentioned, looks very doubtful,” he said. “What you’re not going to see, obviously, is a call for everyone to go back to Wellington (New Zealand) and renegotiate.”

Glauber said it’s unfortunate that few political leaders are promoting TPP or free trade because the advantages are obvious, particularly with something like food.

“Look at the variety we now have in our grocery stores… I think there are a lot of consumer benefits that are just taken for granted,” he said. “That’s probably for producers too. You’re only aware of trade when there is a problem, when someone says we can’t take that … or they slap a tariff on.”

Most North American farmers have voiced support for trade deals because pork, beef, grain and oilseed producers are highly dependent on exports.

“The potential of the CETA (Comprehensive Economic and Trade Agreement deal between Canada and the EU) is immense for Canadian beef producers,” said Dan Darling, Canadian Cattlemen’s Association president. “With the quota access provided by CETA, Canadian beef exports to Europe could grow to $600 million a year from today’s $10 million.”

Trade access to other countries will likely become more critical for Canadian farmers because future demand growth will come primarily from developing nations.

The potential rejection of TPP represents a huge loss for trade because the agreement could evolve into something larger, Glauber said.

The TPP could be taken to the World Trade Organization (WTO) and become the basis for a broader agreement.

During his presentation in Winnipeg, Glauber shared stories from his 15 years of negotiations for the Doha Round at the WTO. The failure of the Doha Round forced many countries, including Canada, to pursue smaller, one-on-one trade deals with other nations.

Such bilateral agreements may be a natural response to the difficulties of global negotiations but they are not ideal. They create exclusive clubs of favoured nations, Glauber said.

“I think that leaves a lot of countries out in the cold. I’d like to see the door open to multi-lateralize…. If you want to join, great. Do what we do and you can join.”

TPP may be doomed, but Glauber hasn’t totally given up hope. The new U.S. administration after November’s elections could push for a deal.

“In my view, I think a lot can be done to explain why (trade) is important…. Farmers in particular can be a very strong force.”

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