Let’s talk about trade and trade deals today. Currently the United States is about to step up to a 25% import tariff on certain Chinese goods. While some folks have questioned the tariffs and reworking of trade agreements, I say IT’S ABOUT TIME. For years we have seen the United States Trade Representative’s Office negotiate for everyone but the folks they work for. The chief example being the WTO agreement which was the tool used by Brazil to cripple the U.S. Cotton industry, along with altering the 2014 Farm Bill.
People have been quick to question and disparage President Trumps push to renegotiate NAFTA and now our trade with China. While I know the temporary heartburn is hard, in the end we will finally see some common sense in trade. For years particularly from 2008-2016 we saw our negotiators work for everyone but the home team. The Brazil case was a wakeup call to just how much power we gave the WTO. The Brazil case should have never happened. Brazil alleged that U.S. farm policy basically distorted world markets for cotton though subsidies and export credit guarantees which were prohibited by WTO rules. After several years of wrangling the U.S. Government agreed to pay $147.3 million dollars to the Brazil Cotton Institute on an annual basis, and change our farm policy. We made those payments until October of 2014.
Instead of our USTR standing up and defending our Ag policy, we changed our farm policy in the 2014 Farm Bill by removing cotton from the Commodity Title and replacing it with STAX. Now we all know worked out, what was funny about the whole thing is after poor Brazil filed the WTO case they not only doubled their cotton plantings, but also doubled down on their subsidy payments. They along with China and India subsidize their cotton industry at levels we’ve never come close too. China has played the WTO policy to their advantage as well. In 2005 when the tariffs went away they transshipped finished goods through other countries, sewing a false country of origin label in those goods, and flooding the U.S. market with them. It was only put to a stop after the NCC and other cotton industry folks went to the USTR repeatedly telling them of the abuse. There are others instances, but I think you see my point.
I took this trip down memory lane to say this…Please be patient as we go through reworking our trade policy. We finally have a businessman in the White House who wants to negotiate and see our Ag sector and business sector be treated fairly. Hang on we may finally see that free and fair trade we’ve been promised for so many years…
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