Four Ways to Rebuild Consensus on Agricultural Trade

(Bloomberg View) -- The financial health of American farmers depends on trade. In what remains the “breadbasket of the world,” U.S. farmers export half of all major commodities they grow, contributing to a projected trade surplus of $20 billion this year alone and supporting millions of direct and indirect jobs. At a time when American farm incomes have been rapidly declining, trade is what’s helping to keep farmers, ranchers and many rural communities afloat.

Not so long ago, we served in Washington D.C. when these realities were well understood. It was a time when bipartisan support for opening new markets to our farmers was assumed and expected. As globalization took hold, we understood that trade agreements were our only tool to ensure that American wheat, soy or beef could out-compete other countries’ products vying for the same markets. It was a consensus that delivered for millions of American farmers. Today, that consensus has faded.

American agricultural trade is facing risks not seen in a generation. Public attitudes toward trade agreements have shifted as protectionist sentiment has grown. Threats of tariffs on U.S. trading partners invite the specter of retaliation. Meanwhile, our competitors plot to assume the mantle of global supplier the U.S. has long occupied. 

We need to rebuild consensus on agriculture trade. It must be one that incorporates the position of American farmers; that reflects the needs of rural communities; that is echoed by state and local leaders, and that seeks to heal the deep fissures on trade in Washington D.C.

We believe that consensus can be built around four important steps.  

First, we need to get off the sidelines and get back in the business of negotiating trade agreements. The U.S. currently does not have a single ongoing trade negotiation that gives our farmers access to the rapidly growing Asian market. Our absence in Asia means that China is quickly moving into the void with its own trade deals that outflank U.S. agricultural producers. One of those China-led deals, the Regional Comprehensive Economic Partnership, involves 15 other Asia-Pacific countries with growing middle classes, many of whom are clamoring for the agricultural bounty the U.S. once supplied.

Meanwhile, agriculture powerhouses like Canada, New Zealand and Australia are cutting bilateral deals that provide preferential treatment for their commodities.

Take the example of beef. According to the National Cattlemen’s Beef Association, as of this week, the U.S. has now lost out to Australia on more than $165 million in beef sales to Japan. That happened because Australia cut a trade deal with Japan in 2015, and we recently walked away from one.

These sharp competitive disadvantages are becoming the norm, and while it’s difficult to calculate all the untapped gains the U.S. has lost, the numbers are clear on how we reverse the trend. Since 2003, U.S. agricultural exports to countries we do have trade agreements with increased more than 136 percent.

Second, we need to remove the threat of retaliation against U.S. agriculture. Our trading partners are not novices when it comes to whom and what they retaliate against when the U.S. runs afoul of our international commitments. U.S. farmers are always target number one.

That is because our trading partners know it is the economic engine for so many states, and because the pain inflicted is immediate and acute.

For example, the last time Mexico retaliated against the U.S., their targets included everything from corn, to apples, to almonds and grapes. The Department of Agriculture estimated that those measures cost U.S. growers close to $1 billion in lost sales.

We know there are onerous trade practices that must be addressed through diplomacy and other mechanisms for setting disputes. But threatening our closest trading partners with blanket tariffs, border taxes or aggressive enforcement actions risks a trade war that would have no winners.

Third, we need to modernize NAFTA in a way doesn’t erode the enormous gains it has delivered for American farmers and ranchers. That means working to eliminate any remaining tariff and non-tariff barriers, simplifying packaging and labeling requirements, and improving agriculture opportunities through e-commerce platforms.

But it also means doing no harm to a pact that -- according to the Farm Bureau -- has resulted in an annual jump of agriculture exports from $8.9 billion in 1993 to $38 billion last year.

The Trump administration has a real opportunity to expand on those gains. They should do it quickly and thoughtfully so we can turn to the task of keeping pace with our competitors.

Finally, to rebuild consensus on trade, we need to organize and educate. We know there are officials in the administration and in Congress who understand the value of agricultural trade. Yet, recent trade debates have too often become a microcosm of our broader partisan politics.

To support this effort, we're launching a bipartisan, not-for-profit organization called Farmers for Free Trade, to build a coalition of farmers, mayors and community leaders in congressional districts across the country. This isn't only about the over 1 million U.S. jobs supported by agriculture trade, but also the secondary and tertiary jobs it creates in rural communities: from growers, harvesters, processors, and packagers to grain elevator operators, railroad workers, truck drivers and port operators.

Rebuilding consensus on trade begins in the heartland and capitalizes on the great strength of American farmers and ranchers. If we can do that, America wins.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

By Brian Nutting, Bloomberg News As chairman of the Senate Finance Committee, Max Baucus has jurisdiction over some of the most consequential issues considered by Congress, including tax and trade policy, Social Security, Medicare and Medicaid. He’ll probably be leaving Congress before he can do much more about them. In January 2014 President Barack Obama nominated him to be ambassador to China. Even before that, Baucus was a short-timer; in April 2013 Baucus, the third-longest currently serving senator, announced that he wouldn’t seek re-election to a seventh term in 2014. He said his priorities during his last months in office would include national issues such as passing a farm bill, renewing the highway bill and overhauling the tax code, along with local issues such as Montana economic development and land and water protection. Baucus has worked to establish a good working relationship with his committee’s ranking Republican, Orrin Hatch of Utah, and before that with Iowa’s Charles Grassley; in fact, Hatch told reporters of the Montana Democrat’s retirement plans before Baucus made a formal announcement. As Finance chairman in 2009, three decades after he first joined the committee, Baucus worked for months with a “gang of six” senators -- three Democrats and three Republicans -- to try to work out a bipartisan health-care overhaul bill. Those efforts weren’t fruitful, and he eventually supported the measure that became law in 2010. Since then, he has used his chairmanship to watch over the implementation of the law, and he hasn’t always been enamored of the progress. Early in 2013 he warned Health and Human Services Secretary Kathleen Sebelius that the administration wasn’t doing a good job in educating the public about how the law would work: “I just see a huge train wreck coming,” he said. Broken Ranks He has broken ranks with his Senate Democratic colleagues on a number of issues, including gun control, immigration and some environmental protections opposed by his state’s drilling, mining and ranching interests. He voted for President George W. Bush’s 2001 tax cut and for approval of the Keystone XL pipeline from Alberta’s oil sands to Texas refineries. In 2013, Majority Leader Harry Reid bypassed Baucus’s Finance Committee and brought directly to the floor a bill that would require businesses to collect sales taxes for purchases from out-of-state companies made through the Internet or catalogs. The reason: Baucus was among the minority of Democrats who opposed the tax and had little interest in moving the bill through his committee. Because his home state is one of five that don’t have a sales tax, the proposal, he said, “is bad for Montana businesses, and anything that doesn’t work for Montana doesn’t work for me.” And, he continued, “we in Montana have a saying about the sales tax: ’Pay More -- What For?’” He favors increasing foreign trade -- an important issue for Montana’s agriculture interests -- and in 2011 he pressured President Barack Obama’s administration to submit trade agreements with South Korea, Panama and Columbia to Congress for approval. He said the Colombia deal would help U.S. ranchers even as some Democrats expressed concern about violence against workers in the Latin American country. Baucus has expressed interest in working with House Ways and Means Committee Chairman Dave Camp, a Michigan Republican, to overhaul the corporate and individual tax codes. He has said that he wants to make the tax system simpler and examine whether certain provisions, such as the preferential treatment of debt, create unintended consequences. Early Years Baucus’s family has lived in Montana since the late 1800s. He was raised on a ranch near Helena that the family still runs. After law school, he worked for the Securities and Exchange Commission and was executive director of the Montana constitutional convention. He first won elective office in 1972, gaining a seat in the state House of Representatives. Two years later he ousted Republican incumbent Dick Shoup to win a seat in the U.S. House. Just four years later, he moved up again, winning election to the Senate after defeating the incumbent, Paul Hatfield, in the democratic primary. Hatfield -- who had been named to the Senate earlier that year after the death of Lee Metcalf -- resigned in December 1978 and Baucus was named to fill the final three weeks of the term, giving him a seniority edge over other members of that freshman class. Most of Baucus’s Senate re-election campaigns have been relatively stress-free -- except in 1996, when he defeated Republican Denny Rehberg, then the state’s lieutenant governor, by less than five percentage points. Despite about $5 million in his campaign war chest, Baucus was anticipating a tough battle for re-election in 2014. While Montana’s junior senator, Democrat Jon Tester, won re-election in 2012 by almost four percentage points, Republican Mitt Romney carried the state in the presidential race by more than 13 percentage points. Baucus’s work on the 2010 health-care law, which is unpopular in his home state, had led to a significant drop in his approval ratings, according to the Great Falls, Montana, Tribune. Updated Jan. 27, 2014

By Dana Wilkie, for Bloomberg News Richard Lugar is nearing the end of his sixth term in the Senate, where he is the chamber’s most senior Republican, tied with Utah’s Orrin Hatch. Lugar is the longest-serving member of Congress in Indiana history. Lugar’s elder statesman status and demeanor, combined with his experience, has gained him respect from all political camps on foreign affairs and farm matters. Elected in 1976 after a failed run two years earlier, the Indiana native and fifth-generation Hoosier has won five subsequent re-election campaigns. During four elections running, he secured at least two-thirds of the vote. During his last campaign in 2006, he won a remarkable 87 percent of the vote. In his post as ranking member (and previously as chairman) on the Senate Foreign Relations Committee, the former Rhodes Scholar has spearheaded a reduction in nuclear, chemical and biological weapons, working to destroy weapons of mass destruction in the former Soviet Union and to step up inspections of nuclear facilities in Russia, Azerbaijan and Ukraine. He was instrumental in passing the Lugar-Obama Proliferation and Threat Reduction Initiative, which was signed into law in 2007 and seeks to deactivate weapons in the former Soviet Union by focusing on terrorists’ use of the weapons. As a former chairman of the Agriculture Committee and the owner of a 600-acre farm, Lugar promotes agricultural exports, biofuels research to wean the nation from its reliance on foreign oil, changes to the food stamp program and streamlining of the Department of Agriculture. An Eagle Scout as a boy, he graduated from Pembroke College at Oxford University, served in the Navy three years, part of the time as an intelligencer briefer, and began his political career on the Indianapolis Board of School Commissioners. After Lugar won election as the city’s mayor in 1968 and served two terms, former President Richard Nixon fondly referred to him as his “favorite mayor” because he agitated for loosening federal power over cities and counties. On some issues, Lugar has been a reliable Republican vote, taking anti-abortion stands, opposing President Obama’s health care overhaul bill and voting for an amendment to limit marriage to unions of one man and one woman. On the other hand, while he first supported the war in Iraq, he later called for reducing the U.S. military presence there. Moreover, he was a major cosponsor, with Democrat Richard Durbin of Illinois, of legislation to provide a path toward citizenship for young people who are in the country illegally. He supports an end to U.S. sanctions on Cuba and voted to expand the federal hate crime statutes to include sexual orientation and gender identity. Lugar’s 1996 run for the GOP presidential nomination didn’t go far; he finished fifth in the Republican primaries, with only 0.83 percent of the vote.

To contact the editor responsible for this story: Katy Roberts at kroberts29@bloomberg.net.

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