Exports Good, Imports Bad: the American Parliament in Action

Listener 12 June 2004. (Fulbright New Zealand enabled Brian Easton to visit Washington as a Fulbright Distinguished Scholar.)

Keywords: Globalisation & Trade;

Other than the New Zealand embassy, it was the only occasion I entered an official building in America without having to showing an identity card. For Congress (the American parliament) is insistent that little should come between them and their constituents. (But yes, there was the metal detector.)

I was visiting the House (of Representatives) Committee on Agriculture, with its own room, not much smaller than our Parliament’s debating chamber, in ornate American neo-classical style complete with chandelier. The senior members sit behind desks in a horseshoe arrangement that encloses the rest of the 50-odd representatives (one black, one woman). At the open end is the table for the witnesses, behind them tables for press and officials, and chairs and crushed standing room for visitors (including a New Zealand Embassy counsellor).

The occasion was the review of trade policy. The Republican chairman gave a short speech that said exporting was very important to American agriculture and the senior ranking Democrat said the same thing (so bipartisan was the committee one had to know that Democrats were on the right of the horseshoe and Republicans the left). Then the two witnesses gave brief summaries of their portfolios, followed by questioning from the committee.

I got little sense of the Secretary for Agriculture (the equivalent of our Minister of Agriculture), Ann Veneman, who was only asked about the major trade disruptions from a minor outbreak of BSE. But Robert Zoellick, the US Ambassador for Trade Negotiations (our equivalent, the Minister for Overseas Trade, is also Minister of Agriculture), was pressed long and hard. He handled the wide range of questions masterfully, shrewdly combining the national strategic context, the details of a particular negotiation, and a sensitivity to the questioner’s interests.

A congressman from, say, Hawaii would (after enlarging on the beauty and importance of his home state) ask about sugar. For, while nothing was done for the Australian sugar producers, the Central American trade deal gave them increased access to 1.3 percent of US production, which threatened, he said, his constituency s sugar farmers. Zoellick patiently explained that without sugar there would have been no deal (in contrast to Australia) and so the interests of domestic sugar producers had to be offset against the gains for other farmers.

The deal meant that half of US farm exports to the region became duty-free.* Many times over, Zoellick pointed out that losses for some farmers would be more than offset by gains for others. He observed that the beef farmers in Hawaii were better off. One congressman vigorously pleaded that sugar be taken out of all future negotiations. Zoellick danced around the question, eventually explaining that he could not go into an international negotiation with his hands so tied. “I would have been pleasantly surprised had you given any other answer,” the congressman replied.

America separates its legislature from its executive, so that the President’s ministers are not in parliament. Yet Zoellick seemed to know every member of the committee personally, and often their electorates as well. In each trade deal he is negotiating not only with the country involved, but also with the elected representatives of the American people. This man, who consorts with the trade ambassadors of the world and reports directly to the President of the United States, reminded me of Kipling’s admiration for someone who could “walk with kings – nor lose the common touch”.

His underlying message can be summarised as follows:
– the future of US agriculture is dependent upon export success;
– the success is threatened by the EU, which funds 88 percent of the world’s agricultural export subsidies. On another measure, the EU trade-distorting domestic support amounts to about $US95b annually while the US’s is about $US45b (to put this in proportion, New Zealand’s annual GDP is about $US80b). However, a US farmer gets a larger average subsidy than an EU one, because there are fewer of them.
– the US is committed to the Doha multilateral round where agricultural liberalisation is central;
– however it will not be held hostage to a single negotiation, and is involved in numerous bilateral trade negotiations;
– there would be overall wins for American agriculture but some sub-sectors would lose out;
– although the Americans are not pursuing a free-trade agreement with China, it is a priority;
China is their fifth-largest – and fastest-growing – agricultural export market.

Except for some subdued comments in Zoellick’s formal paper, there was not a single reference to the case for free trade. The agriculture congressmen are as happy to exploit American consumers and taxpayers as overseas markets. The US approach is old-fashioned, self-interested mercantilism: agricultural exporting is a good thing, importing is bad. But that is no different from their European and Japanese competitors.

* Products for tariff free entry including french fries . I take it that Congress has abandoned ‘freedom fries’.