Fair trade agreements benefit developing countries by requiring higher labor and environmental standards. Fair trade agreements benefit developed countries by reducing the incentive for multinational corporations to move jobs overseas in search of cheap labor. Our first major move toward a fair trade agreement was our participation in the Trans-Pacific Partnership (TPP).
The TPP required participating countries to implement stronger labor and environmental standards, thus leveling the playing field by moving the bottom up. The American Farm Bureau estimated that the TPP would have increased income for U.S. producers by over $4 billion annually. Unfortunately, President Donald Trump withdrew the U.S. from the TPP and the 11 other countries proceeded without us, weakening the trade position of the U.S.
The United States, as the leader of a 12 nation TPP, could have strengthened our negotiating position with China. Trump instead resorted to a tariff war and a lose-lose situation for everyone, especially American agriculture. A new trade agreement is now needed to recover economic losses that all the parties are continuing to incur with Trump’s unnecessary tariffs.
Trump’s decision to withdraw from the TPP also had implications for the North American Free Trade Agreement. Canada, Mexico and the U.S. were all part of the original TPP and within that context had negotiated some outstanding issues such as greater access of U.S. dairy products into Canada. The U.S. was forced to renegotiate with Canada and Mexico for items they lost by withdrawing from the TPP.
U.S. producers also fear they will lose their market share in Japan, because Japan as a member of the new TPP now has more favorable trade relations with Australia, Canada and other members of the new TPP. This forces Trump to use his weakened trade position to negotiate a bilateral agreement with Japan in an attempt to prevent further harm to our producers.
Trade agreements currently being negotiated need to move us away from Trump’s love of tariffs that he has applied to friend and foe alike. New trade agreements also need to move us away from free trade that allows multinational corporations to exploit labor and degrade environments. We need to negotiate fair trade agreements that level the playing field for all by raising labor standards and sustaining environments in developing countries. Trump’s approach to trade is causing unnecessary harm, especially to U.S. producers. Trump has no understanding of the goal that needs to be obtained, which is negotiated fair trade agreements.
Ron de Yong is the former director of agriculture for Montana.