COLUMBUS — A Trans-Pacific Partnership expert at The Ohio State University believes that President Donald Trump’s order Monday to pull the United States out of the trade pact will hurt the U.S. economy and “agriculture in particular.”
Ian Sheldon, the Andersons Professor of International Trade at The Ohio State University’s Department of Agricultural, Environmental, and Development Economics (AEDE), said Monday that President Trump’s executive order was an easy, “but very poor decision and a missed opportunity for the United States’ export market.”
Not everyone agrees. Democrats such as U.S. Senator Sherrod Brown and Republican U.S. Sen. Rob Portman praised the decision, saying trade agreements like TPP would hurt U.S. jobs or didn’t provide a level playing field for the U.S.
However, Sheldon said that in terms of the economy-at-large, most experts believe the TPP would be beneficial for the U.S. GDP. “By 2030 the forecast for the U.S. was about $131 billion dollar increase in gross domestic production, which is about half-a-percent increase in GDP. So I think we are giving up quite a large amount of economic growth,” he said.
“In terms of agriculture, the USDA numbers are that TPP would have increased agricultural trade by about six-and-a-half-percent among TPP countries, so with increased market access, the USDA predicted a 33-percent increase in U.S. agriculture exports by 2025,” Sheldon added.
He said the biggest lost opportunity was access to the Japanese market, where the U.S. has no free trade agreement, and the Japanese government is protective of its own companies and agriculture. “It has been extremely difficult to get access to Japan, which is a very important potential agriculture export market for the U.S.”
But the reversal on TPP should not have a negative impact on those private companies presently doing major business in the Japanese market such as Bluegrass Farms in Fayette County, which exports non-GMO soybeans to Japanese companies.
“I don’t see any change there. But it is not going to make it any easier in the future since Japan was willing to negotiate for agriculture with the TPP agreement,” Sheldon pointed out.
He said Trump has taken a very clear position on trade.
“He thinks trade has resulted in lost jobs in the U.S., and I think signing TPP would be inconsistent with his view on trade. This, even though there are documented benefits to it.”
Trump ran for office pledging to overhaul U.S. trade policy, arguing that massive free-trade agreements have disadvantaged American workers.
The trade deal was the cornerstone of Obama’s attempt to counter China’s influence in Asia. The Obama administration tried for years to finalize TPP. But Obama’s own Democratic Party was skeptical of the pact, and the former president never sent it to Congress for ratification.
After seven years of negotiations, agreement on TPP was reached last October by the partnership’s 12 signatory countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States. But the deal needed Congressional approval. The TPP signatory countries account for approximately 40-percent of the world’s economy.
But both of Ohio’s U.S. senators had concerns about the deal. Last March at the annual Ohio Farm Bureau’s President Trip to Washington, Sen. Brown, a Democrat, said he opposed the trade accord because it would have a negative impact on Ohio manufacturing jobs. He echoed those concerns Tuesday in supporting Trump’s order. “It was the right move.”
In a press release, he said he reached out to the president after the election, offering to work on renegotiating the North American Fair Trade Agreement.
“Throwing out TPP is the first necessary step in overhauling our trade policy to put American workers first,” said Brown. “I stand ready to support Ohio workers by working with the Trump Administration to renegotiate NAFTA, put American workers ahead of corporate profits, and create jobs.”
Rep. Tim Ryan (D-13th District) agreed.
“This deal failed because it lacked the necessary support among Republicans and Democrats in Congress and hardworking men and women.”
Republican Sen. Rob Portman also supported Trump’s reversal on the trade accord.
“For more than two years, I expressed concern that any final TPP agreement needed to address currency manipulation, provide a level playing field for American automobile manufacturers, and protect U.S. biologics. Unfortunately, the Obama Administration moved forward without addressing these concerns, and that is why I opposed the TPP. We can do better, and I look forward to working with the Trump administration and engaging our allies on better trade agreements that open markets for ‘Made in the U.S.A. products’ and protect American workers,” he said in a statement.
But Sheldon is concerned that this reversal will empower China.
The U.S. presently exports to China more than a billion bushels of soybeans annually, much of it from Ohio. Sheldon said that if there is a trade war in the future, “China can easily get their soybeans from Brazil or Argentina.”
The TPP reversal could be the first step toward such a trade war.
“Now the U.S. has given up its ability to drive the agenda. I think China will now push for its own large free trade agreement and set the ground rules. There is already talk of China and Japan forming their own free trade agreement. I think that really hurts the U.S. eventually,” Sheldon said.
Gary Brock is editor of Rural Life Today and can be reached at 937-556-5759. The Associated Press contributed background information to this report.