Thursday, November 10, 2016

Could a Trump presidency boost trade deals' chances?

Perhaps so, posits Daniel Sumner, a University of California-Davis agricultural economist.

Sumner believes trade deals such as the Trans-Pacific Partnership have a better chance of being implemented by President-elect Donald Trump despite his campaign rhetoric.

While Hillary Clinton would have been beholden to unions and other interests that inherently resist trade deals, Sumner believes Trump could renegotiate the TPP and get it passed in much the same way that then-President Bill Clinton did with the North American Free Trade Agreement.

"He did just enough to claim it was his own and said 'lets do this deal,'" said Sumner, director of the UC's Agricultural Issues Center. "(President) Obama did that with Korea ... He did just enough to claim it was his own."

Sumner imagines a scenario under which someone within the Trump administration used back channels to obtain concessions in the TPP so the president could claim he improved it.

Sumner's thoughts came as numerous commodity groups put out statements on Nov. 9 reiterating their support for the 12-nation TPP, which would write rules for global trade the Obama administration argues would increase American-made exports and grow the U.S. economy. Trump argued it was poorly negotiated and would cost U.S. jobs.

It's understandable that commodity groups are nervous, said Eric Houk, director of the Agricultural Business Institute at California State University-Chico.

"Trade plays a significant role in California's agricultural economy," Houk said in an email. "It makes sense that some agricultural commodity groups might be concerned about the results of this election and the uncertainty of future trade deals."

The total value of U.S. agricultural exports has been steadily increasing, peaking in 2014 at $152 billion while U.S. farm imports were $109 billion, Houk said. Ag exports decreased last year because of decreased world demand, lower commodity prices and a stronger U.S. dollar.

However, the U.S. agricultural trade surplus last year was still $25 billion, he noted.
"A decline in U.S. agricultural exports can impact U.S. net farm income," Houk said, noting that domestic net farm income decreased from around $93 billion in 2014 to $81 billion in 2015.

When it comes to voter perceptions about trade, Sumner wishes he and other economists had put more effort into educating people that trade deals help the buyer as well as the seller, he said.

"Both of these candidates played up the notion that there must be something wrong with trade in general," Sumner said. "Mr. Trump certainly had emphasized during the campaign that when it comes to trade, there are winners and losers. But they are both winners; otherwise they wouldn't have made the deal."

The conversations were for my portion of a comprehensive reaction story on the election, for which I was joined by my Capital Press colleagues Mateusz Perkowski and Dan Wheat. The full story is here.

No comments:

Post a Comment