Record Exports Don't Tell the Whole Picture

DC Dialogue

U.S. is abandoning the playing field of free trade while others are racing to enact their own trade agreements to advance trade opportunities.

Published on: September 10, 2012

The latest U.S. Department of Agriculture's export forecast for fiscal years 2012 and 2013 shows a level of U.S. agricultural exports unmatched in the nation's history.

Exports of U.S. food and agricultural products are expected to reach $143.5 billion in fiscal 2013, well above the record set in 2011. At the same time, the forecast for fiscal 2012 is revised upward to a near-record $136.5 billion. Since 2009, U.S. agricultural exports have made gains of 50%.

The forecasted trade balance for fiscal 2013 shows a surplus of $26.5 billion, down $3.5 billion from the revised 2012 forecast. The revised trade surplus for 2012 is $30 billion.

This year those records aren't set by record volumes as the drought has diminished supplies while driving up prices.

One storyline of those numbers is as Secretary of Agriculture Tom Vilsack noted a story of U.S. agriculture as a whole resilient thanks to producers' ability to "innovate, reduce their debt and capitalize on expanding market opportunities."

Vilsack said, "Even with tough odds due to extreme weather, U.S. agriculture is now poised for three consecutive years of record exports, smashing all previous records."

He said another important message from the numbers puts America's agricultural sector on pace to achieve President Obama's goal under the National Export Initiative of doubling exports by the end of 2014.

But without this year's boost in prices, how grim would the trade picture look?

In the last years, the United States has ratified three trade agreements, all negotiated in the Bush Administration, said Condoleezza Rice, former Secretary of State. In a speech at the National Republican Convention, she said it is important to work for an open global economy and pursue free and fair trade, to grow exports and influence abroad.

Countries use bilateral and regional trade agreements to increase market access and expand trade in foreign markets. These agreements are called reciprocal trade agreements (RTAs) because members grant special advantages to each other. RTAs include many types of agreements, such as preferential arrangements, free trade agreements, customs unions, and common markets, in which members agree to open their markets to each other's exports by lowering trade barriers. RTAs have become an increasingly prominent feature of the multilateral trading system in recent years. According to the World Trade Organization, there were 186 such agreements in force in 2005, up from 50 just prior to the Uruguay Round in 1994, less than 25 in 1985, and just 13 agreements in 1975. As the number of agreements expanded, the RTA share of world trade rose from 22% in 1975 to over 50% in 2005. (Read the full ERS report.)

"If you're concerned about China's rise - consider this fact – China has signed 15 free trade agreements and is negotiating 20 more," Rice said. "Sadly we are abandoning the playing field of free trade – and it will come back to haunt us."

It's easy to focus on another record year of trade exports. But the nation needs to continue to focus on expanding markets for when supplies are again plentiful.

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  1. Anonymous says:

    The Obama administration did little or nothing regarding the three trade agreements passed. In fact, the Obama administration and its allies in the Senate delayed their passage as long as possible as a sop to their labor union allies who were against the agreements. The trade agreements were only passed after the 2010 elections and within 2 weeks of submission to Congress by the administration (the agreement with Panama hasn't been implemented yet). There was little to nothing done in the first 3 years of the Obama administration on trade. This is not a political statement, just a statement of fact. This administration has little experience and no expertise in business and held the FTA's hostage until the TAA was revivied and passed.

  2. Anonymous says:

    Hi..I think Sec Rice is tooting her horn which has a few flat notes. I wonder what she means by "negotiated" -- does it mean some conversations were started, or is it signed and completed? The agreement with S. Korea / Colombia / Panama was effected by the current administration. The Pacific Rim discussions have been initiated by this administration. Nafta was done by the Clinton adm. New agreements are reached continually with China and India. For years, Republicans have blocked trade with Cuba, but this adm with its policy of world engagement rather than drawing lines of exclusivity, and with AFBF trade missions and bipartisan support from congresspeople from the Midwest and Florida are working toward opening up Cuban trade. Sounds to me as though Condie (an excellent Sec of State in the dismally runinous Bush years) was just making a campaign speech at a partisan convention. Thanks for reading this...always enjoy your columns! Eldon McKie < kemckie@gmail.com >