Free Trade and the WTO : Farmers Keep Close Eye on Seattle

FUR COMMISSION USA COMMENTARY, DECEMBER 1, 1999
Free Trade and the WTO : Farmers Keep Close Eye on Seattle
By Teresa Platt, Executive Director, FCUSA (April 1998 – May 2011)
SAN DIEGO, CALIFORNIA: Farmers generally keep their eyes on the farm, but the week after Thanksgiving all eyes are on Seattle. The World Trade Organization (WTO)(1) Third Ministerial Convention is meeting Nov. 30 to Dec. 3, with agricultural issues high on the agenda.(1)
Bones to pick at the meeting include government subsidies, duties, tariffs and a host of hidden and not-so-hidden trade barriers supporting a host of agricultural interests. While the EU and North American trading blocks have committed to trading freely with each other, every barrier is a stumbling block.
Looking back at the history of trade, the US has been blessed with such a huge land mass, an area that quickly became the world’s largest unhindered trading block. Products produced in low-wage states were never barred from states with high wages. Kansas’s products, for example, were not blocked from New York. Regional specialties grew. Louisiana’s Cajun Country carved out a niche with crayfish, promoting their product and uniqueness to the rest of the country. Wisconsin established itself as the Dairy State and everyone eats Idaho potatoes.
States regulate business in many areas: child and prison labor standards, access to communal lands, pollution of common waters, land and air. Oftentimes, good ideas hammered out at the State level are adopted nationwide in federal regulation, national standards agreeable to all. Trade flourished, shore to shore, across America’s 3 million square miles.
Expanding Circles of Trade
The US has now expanded its trading realm with the North American Free Trade Agreement (NAFTA), including Canada and Mexico in the mix. Other countries in Central and South America may join soon. Free traders celebrated their successes.
In the 1980′s, Europe followed the successful American format, removing borders to become the world’s second largest trading block. With a long history of separate national identities, overcoming entrenched obstacles to trade is a challenge to the Europeans. How to balance local control with centralized simplicity? Is it possible for Europeans to maintain their diversity while standardizing many regulations?
NAFTA Conflicts
When NAFTA was argued, people were nervous on both sides of the border. Americans worried that, due to the Mexicans’ low wages, they would flood our borders with cheap Mexican goods. And the Mexicans worried that, due to America’s superior technology, Americans would flood Mexico with cheap US goods.
But why does an American make $15 an hour and a Mexican $1? Because the American is standing in front of a multi-million-dollar investment in technology and equipment. And why is the multi-million-dollar investment in America and not Mexico? Because America zealously protects property rights and the rule of law, enticing investment to her shores, while Mexico has a history of nationalizing investment and infrastructure.
After NAFTA passed, Mexico moved to privatize many of her industries, generating opportunities for ownership and involvement by her people. International investment poured into Mexico. Will she hold the course? Time will tell.
After the passage of NAFTA, glaring disparities became obvious. In California, avocado farmers complained about fruit fly-infested produce from Mexico and worked to keep barriers up and strong, for health reasons. The Mexicans complained about American exports of milk wiping out multi-generational dairies south of the border. Pollution from Mexico’s trucking fleets irritated the locals in California, a state with stringent air quality standards. Canadian whiskey, timber and cigarettes flow south. As NAFTA is implemented, the production of goods remained steady but the players changed, oftentimes with shattering results to families who spent generations building businesses. Businesses split into segments to cope. High labor sectors of one company moved south, accounting and high tech transferred north.
On net, America came closer to a supply-and-demand economy. The middleman continued to do well. The consumer saved a bit.
In a perfect world, decisions would be made on true costs accurately assessed: environmental, social, financial costs. If it costs Fisherman A $25 to produce a fish that Fisherman B can produce for $5, maybe Fisherman A should rethink what he is doing or produce something else.
But what happens if Fishermen A outnumber Fishermen B by a factor of 1,000? In a political marketplace, politics picks the winners and losers. If Fisherman A convinces the politicians, government subsidizes the costs of boat building, catching fish, exporting, everything. No one can beat government at going broke and there is no way to measure the true costs of production. In fact, the less efficient the operation, the greater the number of jobs. The more jobs, the more votes. But should Fisherman A be subsidized at $20 per fish when he sells at $5 per fish into the same market as Fisherman B, who produces the $5 unsubsidized fish? Should everyone else pick up the tab? Is this fair trade?
Trying to compete with the EU’s use of export subsidies is “like trying to compete against the European treasury,” said Audrae Erickson, an American Farm Bureau Federation director of governmental relations.(2) Erickson said that the average European farmer’s cost structure is high and that export subsidies compensate those farmers so that they don’t sell at a loss on the global market.
But is production and price everything in this world? Are consumers willing to pay for regional differences, quality and quality of life? Will we become a world of franchises and strip centers and mass-produced widgets? Will the world lose its diversity?
Miscellaneous Trade Barriers
Trade barriers have kept out many products from various markets: wild caught tunas from the Pacific Ocean, shrimp from the Caribbean, sealskin jackets produced by the Inuit, American beef, Venezuelan gasoline. Several years ago, Europe almost kept wild caught fur products out of the EU because they objected to the US production methods, which varied from the European production methods.
The WTO has addressed most of these issues, ruling that disagreements must be addressed in valid forums. The WTO has come down hard on trade barriers as a method of solving disagreements.
Blacklisting Products
The WTO recognizes that when a unilateral trade barrier is put in place, the blacklisted product continues to be absorbed by the world market. But closing major markets without a concomitant reduction in production drags down prices globally for all producers, in banned and not banned countries. This blacklisting hurts the producers. Multi-nationals get cheap products, benefiting from the downturn. This is the global economy at its worst.
What’s the solution? For the global fur producers, multi-lateral programs are WTO-legal and result in people working together to identify and solve real problems.
For wild caught fur, this process was illustrated in the Agreement on Humane Trapping Standards, as tested and approved by the International Organization for Standardization (ISO). The process took 15 years of work by 16 countries. Other countries are expected to follow this ground-breaking work.(3)
No, there is little glory, grandstanding or glamour in working together, and the solutions are simply what they always are: international cooperation, education, individual responsibility and science, science, science. “Beggaring my brother” policies and “big stick” politics may make us feel like we’re getting somewhere, but don’t really solve anything. Worse yet, they yield predictable and troubling results: ill will among neighbors, diminished opportunity and increased poverty.
We look forward to the opportunity to solve real problems with sustainable solutions, ensuring open trade patterns resulting in prosperity for our fur farming families. Along with the most exquisite pelts, let’s export opportunity and goodwill in 2000 and beyond.
NOTES:
-(1) What is the WTO? at www.seattletimes.com/news/local/html98/wtqa_19991130.html
-(2) Farm Bureau News, Nov. 8, 1999, “U.S. pledges to prioritize agriculture at trade talks” at www.fb.com/news/fbn/html/u.s.html
-(3) For information on Best Management Practices, see International Association of Fish and Wildlife Agencies at www.furbearermgmt.org
See also:
The Meter Is Running : “Turtle Safe” Meets WTO By Teresa Platt, June 1997.
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For further information contact Fur Commission USA.
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