Free trade isn’t academic: Washington farmers need new markets

Everything we do has an opportunity cost, as hopefully some patient civics or economics teacher once instructed you. If I go to the Oregon-UW game tonight, I can’t go to the 7:30 Garth Brooks concert at the T-Dome. If WSDOT spends $100 million on a new bridge, that’s $100 million it can’t spend on new overpasses.

Opportunity cost is just a textbook-y way to say that everything we do has tradeoffs and missed opportunities. Politicians don’t like to talk in terms of tradeoffs. They don’t say “Policy X has these downsides, but on the whole I think it will do more good than harm.” No, they prefer to say Policy X is all-upside, no-downside. That’s not real life.

Washington farmers want new export markets
The shift in American trade policy in this new administration has been accompanied by lots of fabulous promises about negotiating better deals. Even if those were true, the new strategy is imposing opportunity costs pretty directly in the near-term, in ways that are creating angst for Washington farmers and others. The Capital Press reports:

Wheat organizations are telling U.S. officials to stop renegotiating existing trade deals and start working on new ones in desired markets…

The wheat industry hopes for a focus in Southeast Asia, particularly Vietnam and Japan. The goal is creating new market access at a time when other wheat export countries have new trade agreements.

Other countries are signing trade agreements, and negotiations over the Trans-Pacific Partnership (TPP) are continuing without American involvement. The Trump White House’s insistence on bilateral trade agreements is imposing its own costs. Our growers are waiting on the sidelines to get into new markets. Meanwhile, farmers in other countries with new trade deals in place are making valuable commercial connections.

The head of a wheat growers group told the Capital Press, “It is time to get past plowing the same fields and start opening ground in new markets.” But negotiating bilateral trade deals takes a lot of time, even when the parties largely agree.

It is increasingly obvious that pulling out of the TPP was a mistake. Sure, it fulfilled a campaign promise, but it represented nine markets that could be opening to Washington wheat farmers and others right now. The TPP served a geopolitical purpose as well, namely bringing the signatory countries closer to us rather than to China. That’s a real opportunity cost, and a breach that will be difficult to repair.

With TPP negotiations continuing, without U.S. involvement, the agreement could expand markets for Canadian wheat farmers but not ours. Apple growers are also very interested in expanded markets. They and the wheat farmers see missed opportunities, and talk of blowing up NAFTA is an added and unnecessary stressor.

The daddy state, here to oversee
Washington farmers seeking new export markets are naturally concerned with the bottom line, but the shift in American trade policy isn’t driven by a strictly dollars-and-cents rationale. There’s a broader philosophical debate being waged here. Republicans have usually supported free trade, but not everyone is on board. Former White House official Steve Bannon told The Economist magazine, “You support a radical idea, free trade. I mean it, that’s a radical idea.”

Radical? Not really. I think what bothers Bannon et al is that truly free trade doesn’t just mean the free movement of goods, it means cutting out the politicians and the power brokers. Traditionally that has appealed to the GOP, but not to the new nationalist strain that Bannon represents.

When individuals and companies trade freely across national borders without tariffs, it means less opportunity for government to squeeze, tax, and cajole them. The opposite vision is one where government tries to fine-tune every economic interaction and ameliorate every downside. This doesn’t work internationally any better than it does within our own borders.

It’s a vision that says government should be in charge, only government can see the big picture, and you can’t decide your own best interest.

If the welfare state is the mommy state, this is the daddy state. For our own state – the most trade-dependent in the nation – this isn’t a merely academic debate. Our economy runs on international trade, and a turn against it will mean worse economic prospects for Washington.
-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.