I know that the battle over how much we spend and what we spend the money on in the $1.9 trillion Relief Bill will dominate our Congress. But I want to talk about trade now. In agriculture we are expecting a good year after 4 or 5 years of weak prices. Since we export to other nations at least 25% of our production, we need to protect and expand those markets. Our ag trade is usually a net plus, but U.S. over all trade ran a $678 billion deficit last year – the worst in 12 years. The reality is that trade relations are fractured. Our conflicts and disputes with China over the last 4 years have been in the headlines and although President Trump did negotiate a phase one deal with China, that is not the complete answer. We are in a major conflict on trade with the EU and other nations also.
President Trump used tariffs to get other countries to make reforms that were needed, but tariffs are not the best solution. Countries all over the world are unhappy and frustrated that trade disputes are not resolved. 164 countries belong to the World Trade Organization (WTO). The WTO has shouldered broad criticism because it has been slow and unable to solve trade disputes between member countries. Myron Brilliant, Executive Vice President and Head of International Affairs for the U.S. Chamber of Commerce said, “Above all we need to restore the WTO as a forum for meaningful trade negotiations and the settlement of commercial disputes.” Now is our chance.
A new WTO Director-General has been selected. Ngozi Okonjo-Iweala, the former Finance Minister of Nigeria, starts March 1st to reform, strengthen, and manage the WTO. She will have a load on her shoulders. The WTO members must stand behind her or she will get nothing done. It is especially essential that the US, China, Europe, the UK, Brazil, and other big export countries take the lead in fixing the broken WTO. President Biden wants to take a more multilateral approach to trade – more trade agreements. He wants to join with Europe to push Chinese trade reform. However, at this point President Biden is not ready to lift the Trump tariffs. We shall see.
John Block served as Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill. John hosts a weekly radio show going back more than 20 years. The commentary and opinions shared are a summary of the discussion from the broadcast and not a reflection of the opinions of the firm at large. For more from John Block Reports from Washington visit www.johnblockreports.com.