World Bypassing the United States
“The first step is to make concessions to America. The second is to look elsewhere.” This sentiment on trade relations with the U.S expressed by a South Korean official seems to have taken hold with South Korea and other trading partners. U.S. trade and foreign policy appear to be impelling countries to strengthen trade ties elsewhere. Examples abound of countries seeking to curb their reliance on trade with the U.S. by expanding ties with other countries. The European Union (EU) recently entered into a free trade agreement with the Mercosur customs union, four South American countries. Dubbed as the “cows for cars” deal, it includes Brazil and Argentina, competitors to the U.S. in global agricultural markets. The EU is the fourth-largest purchaser of U.S. agricultural products and a significant importer of U.S. soybeans and ethanol. To be fair, negotiations on the agreement began well before U.S. policies took a drastic turn in recent years, but U.S. policies certainly contributed to the agreement’s finalization.
The EU has also entered a trade agreement with India. The deal links economies with almost 2 billion consumers and opens new markets for European cars and other products. In addition, Canada and China have entered into an agreement reducing tariffs on Canadian goods shipped to China including agricultural products like canola oil. And England announced a new deal with India and has updated an agreement with South Korea.
The value of exports typically equates to 30% of Nebraska agricultural receipts in any given year. Trade matters for agriculture. Josh Roe, CEO of Kansas Corn, commented on trade’s importance when he said, “with our record corn exports, they easily make up a third of the value of a bushel of corn. We all know where prices are now — imagine where they’d be without these record exports.” Deals among other major export competitors (Brazil, Canada, Argentina) and major importers (China, EU, Canada) risks leaving U.S agriculture behind. Agriculture should be concerned. The world is moving forward, putting a source of revenue at risk.