WASHINGTON, Mar. 1, 2017 - The chief agricultural trade negotiator for former President Barack Obama mixed in some hopeful projections while describing risks of trade disruption and possible economic losses brought on by the new U.S. administration’s aggressive tack on foreign trade.
“There are a lot more questions than answers now about our trade policy,” Darci Vetter told a sweeteners industry conference this week in Dana Point, California. Vetter, who led agricultural negotiations for the Trans-Pacific Partnership (TPP), which President Donald Trump has rejected, said “there is a lot of noise around this transition (to a new administration), but part of what they are going through is perfectly normal” when a government changes leaders.
Vetter said that for the sweeteners industry, U.S. withdrawal from TPP “doesn’t mean much,” pointing out that the pact would have resulted in about 85,000 more tons of sugar annually from Australia and Canada, a modest addition to the national supply.
However, withdrawal from TPP creates a substantial disadvantage for U.S. exports to the 11 other nations that were involved in the trade agreement, she said, because they all committed to significant measures of increased access across all trade sectors and products – “new access on all fronts,” especially in meat, poultry and dairy products. Canada, for example, agreed to open its market to dairy, poultry and eggs. Now, those TPP countries, which include Japan, Mexico, Chile and New Zealand, are preparing to “have a preference for access to each other that we will not enjoy,” she said.
Also abandoned with the TPP, Vetter said, is the “unwritten rule of ambition,” because the pact was designed to set new standards that other nations would have to meet in future deals with the U.S. and other TPP members. The new standards would have been crucial to U.S. exporters, including strong ones on food safety, sanitation, and GMOs. For example, there was a requirement that a nation’s rules on genetically modified ingredients must be scientifically justified. That would mean that China would face mounting pressure to meet TPP rules in its trade with the pact’s members.
Vetter said the TPP was partly aimed at strengthening U.S. political alliances in Asia, to serve as a counterweight to China’s aggressive military moves.
Vetter gave her outlook on other trade matters, such as the 23-year-old North American Free Trade Agreement with Canada and Mexico. Trump and his political appointees have called for various actions – from outright withdrawal, to renegotiation, to selected tweaking. Any U.S. action “needs clear direction,” Vetter said.
Withdrawal would have tremendous impacts because the continent’s supply chains have become so interwoven since the 1990s. Renegotiating NAFTA would be just as complicated, she said: “If we put tariffs or market access on the table, there is nowhere to go but down. We’ve been at zero tariffs on all of the goods that move back and forth … since 2008.” Canada and Mexico would make as many or more demands as the U.S. would to change the agreement, including on trade for sugar and products containing sugar.
Still, Vetter said, “there are some very good reasons to modernize NAFTA,” including its side agreements, such as the one on sugar, Vetter said, since the deal was negotiated so long ago. The U.S. and other nations now include “enforceable provisions” on fair labor, intellectual property and the environment that were not dealt with years ago.
Concerning Trump’s proposed 20 percent border tax on all products imported from Mexico to pay for a southern border wall, Vetter said such a tax would involve foreign policy matters, “and would have ripples far beyond just the tax.” She said some nations have imposed border taxes that have been found to be fair under world trade rules. But, she said, the U.S. may risk violating those rules if imposing such tariffs against a fellow member of the World Trade Organization is seen as a punitive move, since equity in treatment of all members is a basic WTO principle.
Randy Green, a lobbyist for sugar users, thought Vetter “did a pretty good job of covering the waterfront” on U.S. trade, especially on policy toward China. American interests need to know more about how China benefits from the U.S. withdrawal from TPP, he said. “Everybody says that, but typically without a lot of detail.” And, he added, “There is a foreign policy component to trade that we neglect at our peril.”
On a lighter note, Vetter responded to Trump’s public condemnation last week of the U.S. trade negotiators’ performance: “Embarrassing trade deals that are no good – none of them. You wonder, where did the people come from that negotiated these deals?” he asked.
Vetter, who grew up on a Nebraska farm, commented: “At least one came from a farm in Nebraska.”