January 30, 2015    Volume 22, No. 2

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Agriculture Is The Engine Driving Passage Of A New Trade Deal

By Richard A. McCormack

Members of the Senate Finance Committee welcomed United States Trade Representative Michael Froman to their chamber in late January, with most members lavishing praise on him as the public persona of President's Obama's embrace of free trade.

Save for a few Democrats on the Committee who raised concerns about the proposed Trans Pacific Partnership and Trade Promotion Authority, most of the senators were pleased by progress being made and encouraged rapid passage of TPA.

The majority of senators on the Finance Committee were most ebullient over prospects of TPP opening Asian markets for agricultural commodities, and many of their questions of the Trade Rep. concerned poultry, beef, dairy, cotton, ethanol, wheat and soybeans.

Even some Democrats who have been skeptical about free trade seemed to waver and focused on agriculture, with Sen. Ron Wyden (D-Ore.) telling Froman that "dairy is a very important issue in the Pacific Northwest."

Sen. John Isakson (R-Ga.) said his primary concern is opening overseas poultry markets. "That is very important to my state of Georgia," he said.

Sen. Tom Carper (D-Del.) echoed Isakson's statement. "We raise poultry and soybeans on the Delmarva Peninsula. We want to sell them to as many markets as possible."

Sen. Rob Portman (R-Ohio) said he was concerned about a small company in Akron "that is getting shut out of the beef market in Japan."

Sen. Michael Bennett (R-Colo.) said "nowhere is [TPP] more important to our state than our agricultural sector." His state exports $2 billion a year in wheat and the state's wheat growers "export 80 percent of what they grow."

The Senate has far more members from small agricultural states than industrial states, with North Dakota (population 700,000) having as much representation in the chamber as New York (population 20 million).

After asking about whether Japan would be required to open its market to U.S. pork producers under TPP, Sen. Chuck Grassley (R-Iowa) stated the obvious: "It seems to be at least in the U.S. Senate that a good agricultural agreement seems to be the locomotive that brings along everything else. I hope that manufacturing will help along that line as well, for their own good."

A few of the senators from industrial states said TPP would likely not be for their own good. "I care about agriculture but I care about manufacturing and automobiles," said Sen. Debbie Stabenow (D-Mich.) "The key is to export our products not our jobs and that is the fundamental debate."

Sen. Bob Casey (D-Penn.) said that "despite promises and assertions that lead up to trade agreements too often our state has gotten the short end of the stick. We see very powerful and financed special interests in this town who don't get the short end of the stick. They do very well."

Froman came armed to address Casey's concerns. Pennsylvania's exports have grown by 150 percent over the last 10 years and now amount to $41 billion, he told Casey. The top export products from Pennsylvania are chemicals, minerals and fuels, and metals and ores. In most foreign markets, there are 35 percent tariffs on these products. "With this trade agreement we will open up markets and protect workers, protect American jobs by ensuring a fair and level playing field by raising environmental and labor standards and IP rights" and new controls on state-owned enterprises "that pose a real threat to your workers in Pennsylvania."

Casey said he has "no doubts" about Froman's intentions, "but the problem is some of us have heard this before" and it has never panned out with respect to manufactured products like tires, paper, solar panels or steel.

Froman was asked repeatedly if there are provisions being negotiated in the Trans Pacific Partnership to address countries that manipulate their currencies to give their manufacturers an advantage over American competitors in the U.S. market and in global trade. Froman was elusive though consistent. In addressing Sen. Grassley on the issue, he said, "Well, this is an issue, as you know, of top importance to the administration and we are pursuing it from the President on down directly with countries such as China but also through the G7 and G20 and the IMF to encourage countries to move toward market-determined exchange rates. I know you will be seeing [Treasury] Secretary Lew here soon. He obviously has the lead on those issues. It is something that he and I are consulting on and continue to engage with others about."

So, Grassley wanted to know, does that mean it's not being included in the trade negotiations?

Froman replied: "At this point, Secretary Lew who obviously has the lead on this, has been having conversations with these other mechanisms, bilaterally, the G7, G20 and IMF."

Grassley had still not received a direct answer, so he persisted: "But not through TPP."

Froman sat taciturn. Grassley said, "thank you."

Sen. Chuck Schumer (D-N.Y.) was next up. He spent his five minutes lecturing Froman without asking him question. "With all due respect," Schumer said, "Secretary Lew is great and he talks to me but the administration hasn't done very much [on currency.] They have never called China a currency manipulator when it is as plain as the nose on your face that they are."

Schumer said he would not support TPP if there was not "at the same time a new statutory law to enforce currency. I will not support moving this trade agreement forward if we are not fighting to make sure we have the necessary tools to protect the American middle class and American jobs."

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