Friday, March 29, 2024

Storm clouds building

Posted

GUEST COLUMN

The population of the world is now 7.7 billion and growing. The United States population is 329 million and growing.

As I have asked my classes over the last few years, “Where is the market for what you want to produce?” And it doesn’t matter whether it is cars, trucks, airplanes, beef, pork, milk, cotton, peanuts or widgets. Their answers are always the same. Obviously it is the world.

Then the class discussion gets a little more complicated.

The world market has never been a totally free market. For that matter neither has the U.S. But overall the U.S. has been among the top 10% with few surpassing us.

What trade agreements strive for are fair markets, in which producers can compete with minimal government interference, agreed on rules, and those rules enforced by the countries involved.

Here the Trump administration was right in saying to the Chinese, enough cheating. Play by the rules or we will impose countermeasures to level the playing field until you come to the table and negotiate.

But plans thus for have not worked out, if there ever was a plan? Not to mention Canada, Mexico, European Union, etc. etc.

American farmers in particular have been hurt badly by loss of markets through retaliation. What is ironic is that most of American agriculture had played by the rules, and export markets had grown and were growing.

Now the Trump administration and their base of supporters, which again ironically include many farmers and ranchers, are beginning to experience some hard lessons.

Protectionism (America First) as carried out by this administration is not working. Short term it can be masked by subsidies, but that adds to the debt which cannot be ignored forever.

Even if you are the richest, strongest country in the world you can’t bully other countries to do what you want (even if you are right).

And if you are wrong it can get really bad. The leaders of all countries have to negotiate trade agreements that they too can, with credibility, claim are fair to all sides. They have voters too. Unless they are ruled by dictators.

Here is where storm clouds are gathering, and some are looking very severe. Tornado warnings are everywhere. Let’s list a few.

1. We have managed to create a feeling in NATO that now, when we need the Western world to stand firm against terrorism (Iran), they openly no longer trust America’s leadership. Even England, who has its own challenges with Brexit.

2. The European Union on June 28 signed a historic free trade agreement with the Mercosur bloc of South America that we had worked on for 20 years. Now we are excluded.

3. Last year after President Trump withdrew from the Trans Pacific Partnership (TPP) which Obama had worked hard to achieve to counter China’s growing economic clout in Asia and in Latin America. The remaining signatory countries that include Mexico, Japan, Australia, South Korea, New Zealand, Philippines, Vietnam and Singapore signed the so-called TPP11 without the United States!

4. Even China and India are negotiating a regional trade agreement with 11 other Asian countries that could make it the biggest trade bloc in the world. Guess who will be excluded?

5. Even our newly negotiated trade agreement with our neighbors Canada and Mexico that marginally improves NAFTA is in danger of not passing our Congress. Canada and Mexico are our best customers for agricultural products.

I don’t know about you, but I have always felt more comfortable when the United States of America was the respected leader of the Free World. No matter who was in the White House.

We are now in the process of destroying that leadership. Who will replace us? I can name three who would like to. Russia, China and Iran.

Do we really not care?

Charles Stenholm is a retired U.S. congressman. He and his wife Cindy live in Granbury.