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As Trump and Clinton bash trade, economists say farmers could suffer

 

By Bronson Teichert
Oct. 22, 2016

If rhetoric foretells policy when it comes to international trade, it might not matter who wins the presidency in November. Utah’s farmers could lose big.

That’s the contention of several Utah economists who say the politics of public perception, rather than sound policy, appear to be driving the debate on trade agreements that benefit American agriculture.

“From the point of economics, I see politically where people will talk about trade and say we are disadvantaged in some way,” said DeeVon Bailey, a professor of agriculture and applied economics at Utah State University. “But in the case of agriculture, that’s not true.”

Yet between barbed exchanges during three debates culminating Wednesday in Las Vegas, Donald Trump and Hillary Clinton found détente on trade. Both favorably spoke of renegotiations of the North American Free Trade Agreement, the Trans Pacific Partnership and economic relationships with China.

NAFTA includes the United States, Canada and Mexico as trading partners. The TPP has yet to be implemented, but would include a total of 12 countries along the Pacific Rim.

None of these agreements is perfect for everyone, Bailey said, but U.S. agriculturalists do benefit.

“Trade is really important to agriculture and has become more important over the years,” he said. “It doesn’t mean there aren’t people that are hurt by trade, but American agriculture has been a beneficiary as a result of trade.”

Manufacturing, Bailey said, "is a completely different story and has worked in a different way."

"The politicians are aiming for that," he said. "But if you’re talking about agriculture it is hard to make that argument.”

Reza Oladi agreed.

The Utah State professor of economics compared international trade to everyday economic activities. Instead of learning how to fix his roof, he said, he would hire a professional to do it. In exchange, Oladi suggested, he could teach economics to the children of the person who fixes his roof.

“You have to look at the totality of this, not just one industry,” Oladi said. “I can teach better and he can fix the roof better. So we specialize and we trade.”

And when it comes to the farm products that feed the world, no country produces as efficiently as the United States, a world leader in exports of crops including corn, soybeans and wheat.

Oladi said the United States shouldn’t be producing things it isn’t good at producing.

“People cannot separate their own experience with the totality of the economy,” Oladi said. “Yes, there might be someone who is working in a particular industry that might lose his or her job. Of course they could be worse off, but the entire economy is going to be better off. This is where gains from trade come from.”

Oladi said not every industry has done well, but overall the economy has benefited from NAFTA. That's a position backed by the non-profit, non-partisan Council of Foreign Relations, which has noted that NAFTA has likely had a “modest but positive” impact on the U.S. economy worth several billion dollars of added growth per year. The upsides often escape notice, the council has suggested, because the costs are highly concentrated in specific industries like auto manufacturing, while the benefits are distributed widely across society.

Matthew Schroeder, a regional economist for the Bear River and Wasatch Front area, said politicians don’t always listen to economists.

“Politicians consult with us indirectly, typically through the legislature,” Schroeder said. “There will be a request for a study on the labor market or the supply and demand needs.”

Schroeder said it can be frustrating to do a study and have a policy go in a direction that contradicts the results of his work.

Oladi said economists seem to have a problem convincing people free trade is a good thing and people are skeptical because of misinformation.

“Politicians change what they say depending on the mood of the public,” Oladi said. “Whatever direction the wind blows, they will go with it.”

Trump has pledged to renegotiate or pull out of NAFTA and has vowed to kill the TPP deal.

“With Hillary Clinton, I’m not sure because she was pro Trans Pacific Partnership previously and has now backed out of that position,” Schroeder said. The Democratic nominee has promised to re-evaluate NAFTA.

“In terms of what they’ll actually do,” Schroeder said, “I don’t know.”

Bailey agreed.

“Exactly how they’ll try to implement trade restriction or policies is really unknown,” Bailey said. “I don’t see any clear policy that people are putting forward that one could really analyze. In economics there are gainers and losers."

And the politicians, he said, "are concentrating on who has lost.”