Do not pull on the pianist

Trade deals are a non-starter in Washington these days, so U.S. Trade Representative Katharine Tai will be talking with Asian countries about 'economic engagement' instead.

Exactly how agriculture will benefit is unclear. US Trade Representative Katharine Tai addressed this issue generally. According to DTN’s Clayton, Tai told reporters, “We will see engagements with IPEF partners that facilitate agricultural trade through science-based decision-making and the adoption of sound and transparent regulatory practices. This will help our farmers, our breeders and our fishermen to gain certainty of transporting their products to the region.

Somehow, the administration’s approach conjures up memories of the sign the legend hung in old Western saloons: “Don’t shoot the piano player, he’s doing the best he can.” . The Biden team is talking to potential Asian partners about “economic engagement” because they can’t talk about trade. And you have to hand it to the administration: although they don’t offer anything in terms of market access, they got 13 other countries to at least join the conversation, including even India.

The trade deals are unpopular because voters blame them for the loss of factory jobs that many communities have suffered. It infuriates voters to see American companies closing factories at home and moving their manufacturing to low-wage countries.

It is no consolation that much of the loss of manufacturing jobs in the country is due to technology and not trade. And yet it is true. Technology boosts productivity, allowing factories to produce more with fewer workers. For example, the American Iron and Steel Institute reports that it took 10.1 man-hours to produce a finished ton of steel in the early 1980s, but only 1.9 man-hours in 2017. (https://www.steel.org/…)

The increase in manufacturing productivity is a global trend. In Germany, which, unlike the United States, traditionally runs trade surpluses, the share of manufacturing industry in total employment fell by 19 percentage points between 1973 and 2012. In the United States, the decline was by 16 percentage points. (https://www.csis.org/…)

Yet it is undeniable that many factory jobs have been lost to imports. Past administrations have sometimes intervened to minimize losses. For example, the Reagan administration convinced the Japanese to agree to “voluntary restrictions” on their automobile exports. Soon Toyota and Honda were making cars in the United States

When China was admitted to the World Trade Organization at the turn of the century, American manufacturers could not resist the Chinese combination of favorable trading conditions and industrious low-wage workers. Offshoring has accelerated. Is it any wonder that voters blame trade deals for deindustrialization?

The Trans-Pacific Partnership would have cost the United States more manufacturing jobs, but how many are unclear. What is clear is that pulling out, as President Donald Trump did on his first day in office, has undermined American influence in Asia. Not only did the other 11 nations pursue the TPP without the United States, but many of them recently signed a tariff reduction pact with China, the Regional Comprehensive Economic Partnership.

The IPEF represents an attempt by the United States to reassert its economic leadership in Asia while tacitly acknowledging that trade deals are political poison in Washington. But because it doesn’t offer much to partner countries in terms of market access, it may not bring much benefit to the United States. And because it’s a creation of the executive branch that won’t be ratified by Congress, it can easily be reversed by a future administration.

Farming can benefit from it anyway, but don’t hold your breath.

Urban Lehner can be contacted at [email protected]