September 21 - This morning, the Agricultural Leaders of Michigan (ALM) released the following letter detailing the benefits of trade for U.S. agriculture, and urging policymakers to be proactive in establishing new markets abroad for Michigan-grown agricultural products. A PDF copy of the letter can be found at this link.
September 21, 2016
Michigan Benefits from Friendships Abroad – Let’s Keep Growing Agricultural Trade
In recent months, our organizations have been highly engaged on issues of trade. We believe trade is an important issue and an opportunity we shouldn’t take for granted. A commitment to international trade starts with Michigan’s strong relationships among North American nations, and should extend to seizing new opportunities across the Pacific and Atlantic.
The strong trading relationship between Michigan and other countries in North America has fueled farming and agribusiness to become our second-largest economic driver in the past 20 years. In fact, Michigan’s agriculture sector exports more than $3 billion worth of products every year, and the majority of those exports head to Canada and Mexico. Without trade, we would have a fundamental inability to sell what we grow. Domestic markets alone aren’t sufficient for the rapidly-expanding production of grain, dairy, processed food products, biofuels, fruits and vegetables that we produce across Michigan.
The fact is, agriculture, and rural Michigan communities, would be in far worse shape without the export opportunities we have today.
Nonetheless, it’s a turbulent time for international trade. Both major party presidential candidates in the United States and many in Congress have declared opposition to the Trans-Pacific Partnership (TPP) and criticized the North American Free Trade Agreement (NAFTA) that’s been in place with Canada and Mexico since 1994. Expanded trade negotiations with Europe are stagnant for the time being. Promising new markets, including Cuba and countries along the Pacific rim, are stuck in political purgatory. And China – which has been a growing, albeit unpredictable market for U.S. agriculture – has been accused of violating its World Trade Organization commitments in a filing made just last week by the U.S. Government.
Whether they’re caused in Washington, Paris, Beijing or anywhere else, headwinds against open trade will have consequences for agriculture and rural America. Agriculture is one of the only sectors of the U.S. economy that produces a trade surplus, but our current trade opportunities only stretch so far – especially as farmers become more productive, increasing the availability of Michigan products for sale at home and abroad.
Right now, there are multiple opportunities for expanded trade, and we should think carefully before letting them go by the wayside.
First and foremost, Congress should approve the TPP, a historic trade deal with Asian nations that would open the door for additional U.S. agricultural products to be sent across the Pacific. The untapped opportunity for U.S. agriculture within the TPP tops $4.4 billion on an annual basis, and many of the products we supply from Michigan would see an export boost – including dairy, corn, soybeans and other feed grains. While we’ve heard a lot of brash rhetoric about the agreement, the fact is it can’t be scrapped and renegotiatied. Reaching this point took years, and the strong deal extracted by U.S. negotiators is the best shot in a generation to expand trade in a rapidly-growing area of the world. If we choose to walk away from this agreement, we’re giving up a foothold for many U.S. products in Asia that we won’t easily regain.
Congress should also finish the work of fully normalizing trade with Cuba. Using Cuba as a political football is antiquated, harmful to our economy, and detrimental to efforts to expand freedoms for the Cuban people. While you can get online and book a commercial flight to Cuba – a big step in the right direction – U.S. businesses still can’t extend credit to the cash-strapped nation. That means that while Michigan’s farmers have plenty to sell to Cuba, we can’t finance any of it, shutting the door on trade.
Finally, let’s recognize the long-term benefit existing trade relationships have had for Michigan agriculture. U.S. agricultural exports outperform in nations that have a formal trade agreement with the United States. In the two decades since the implementation of NAFTA in 1994, U.S. agricultural exports to Canada and Mexico have more than quadrupled, growing from $8.9 billion in 1993 to $38.6 billion in 2015. Michigan has seen a big share of that benefit, especially when it comes to interacting with Canada. Our Michigan agriculture sector has strived to be proactive and work with our counterparts across the border, and that’s led directly to new economic opportunity for Michigan.
Every year, Michigan agriculture sends billions of dollars worth of products to other countries. Exports are a bright spot in our agriculture economy. But we could be doing more. Michigan dairy and pork products could be sold in far greater numbers across Asia. Michigan soybean and corn growers could fill a growing feed demand that will skyrocket globally in coming years. Michigan black beans and apples could be on Cuban plates, serving a totally untapped market of nine million just a few miles from U.S. shores. But it all starts with open trade, and political leadership that takes a proactive view of the world.