BUENOS AIRES — Agriculture ministers are not used to working in the hot glare of media attention, but that was before President Trump and his fellow world leaders put farmers and food at the center of the fight over the future of the world trading system.
Mr. Trump last week pledged $12 billion in aid to tariff-hit U.S. farmers while declaring he had “just opened up Europe” for products.
The conflicts over trade and the vulnerability of agriculture in any trade war were on full display as top farm ministers from the Group of 20 industrial and emerging-market nations met in Argentina’s capital city.
Agriculture Secretary Sonny Perdue was often a lonely voice defending Mr. Trump’s hard line, but many ministers seconded his hope that “trade disruptions” — as he put it in an interview with The Washington Times — could be resolved sooner rather than later.
But the general expressions of optimism showed few signs of translating into resolutions of specific cases. Mr. Perdue called Canada’s dairy import protections — once a particular target of Mr. Trump’s Twitter ire — a disgrace and a potential impediment to a successful renegotiation of the North American Free Trade Agreement.
“Canadian goods and services come into the United States freely and fairly, and our dairy producers are exposed to 250 to 300 percent tariffs on their dairy products …,” Mr. Perdue said. “I really think customers should be in control of that, consumers should be in control of that. We believe that low-cost producers really should be the ones that thrive in this world.”
But Canada’s supply-management system is “a model for the world,” Canadian Agriculture Minister Lawrence A. MacAulay insisted in a separate interview. He argued that free trade did not necessarily have to be an all-or-nothing proposition.
“We’re very open to open, free trade,” Mr. MacAulay said. “But Canada and every country around the world could have some specific area in agriculture that they’re concerned about and deal with it in their own way.”
The need to appease powerful domestic farm interest groups has always posed particular problems for free traders. Virtually every nation in the world has resorted to subsidies, tariffs and non-tariff barriers to shield segments of their agricultural industries. Moving toward trade based on the “no tariff, no non-tariff barrier, no subsidy” mantra that Mr. Trump has recently championed could be more challenging than the president makes it sound, Mr. MacAulay said.
“Of course you have to look at what ’getting rid of it all’ truly means — and if you can get rid of it all,” he said. “You’re talking about complex issues; there are many ways things can be subsidized.”
Aid or ’bailout’?
Mr. Perdue announced the $12 billion aid package for American farmers in response to Chinese retaliatory tariffs this month that targeted U.S. soybean farmers, among others. He told the Reuters news agency that the plan would include up to $8 billion in direct cash payments to U.S. growers and that the checks would be distributed as early as late September.
Critics, including a number of conservative economists and lawmakers, decried the aid as a bailout. Even the rural community has voiced doubts, said Wallace Tyner, a professor of agricultural economics at Purdue University.
“The farmers say, ’Yeah, I’m going to take the check. But I want trade, not aid, access to markets, and you’re denying me access to markets,’” Mr. Tyner said. “The farmers aren’t buying this notion that ’evil China put these illegal tariffs on.’”
Even Mr. Perdue conceded to Reuters that the payments are “not going to make farmers whole.”
But Mr. Perdue argued that much of the criticism is political and farmers, a key component of Mr. Trump’s electoral base, were proud that the president had confronted the Asian giant.
“No one will force [U.S. farmers] to apply for this money. We’re not going to drag people into the Farm Service Agency and say, ’You take this,’” he said. “This was a safety net decision. The president had committed that he would not allow them to bear the brunt.”
A large chunk of the aid is expected to go to soybean farmers, whose last-minute pre-tariff exports helped fuel the 4.1 percent second-quarter growth in gross domestic product announced last week and whose bleak outlook Mr. Trump sought to sweeten when he said the deal he struck with the EU meant that the bloc would start buying American soybeans “almost immediately.”
“Soybeans is a big deal,” the president said Wednesday after he and European Commission President Jean-Claude Juncker agreed to a truce in their trade war. “They’re a tremendous market.”
On Capitol Hill, pro-trade Republicans voiced skepticism. Sen. Jerry Moran of Kansas pointed Thursday to USDA statistics logging $1.6 billion in 2017 soybean sales to EU countries, a sum that pales in comparison with China’s $12.3 billion.
“There is no impediment to Europe buying our soybeans now,” said Mr. Moran, whose state is home to some 15,000 soybean farms. “Unlike China, it’s a different market in which we’re selling to individual businesses that make decisions about where to buy.”
German Agriculture Minister Julia Kloeckner, whose country ranks among Europe’s top soybean buyers, hinted at the G-20 gathering that she had no intention of urging German businesses to favor American suppliers over other competitors.
“There’s clearly a need for soybeans, for imports, given that Europe imports more than it produces itself and intensively uses soybeans as animal feed,” Ms. Kloeckner said in an interview. “But at any rate, a German minister does not intend to poke anybody.”
Eyes on the prize
Mr. Perdue said Mr. Trump has his eye on the big picture: that U.S. crops, if allowed to compete, would do just fine across the pond in the long run.
“I think soybeans were more of a buzzword because that’s where the damage came from China,” he said.
Still, the tangible effect for U.S. producers will be a shift away from soybeans, and Mr. Perdue said he fully expects farmers to make that adjustment. The big winner, in the meantime, will be Brazil, whose soybean exports already have risen notably.
“They’ve got the beans in the bin. They’re harvested, they’re there, they can export them,” Purdue University’s Mr. Tyner said. With millions of acres available, Brazilian growers now could ramp up production to “take markets from the U.S. more or less permanently, and that’s the real danger to the U.S. farmer,” he said.
U.S. ranchers, too, may soon feel the pain of the trade trouble as Japan’s new trans-Pacific and EU free trade agreements threaten to cut into their Asian markets for U.S. beef exports.
Japanese Agriculture Vice Minister Atsushi Nonaka said the best way forward would be for Mr. Trump to rethink his entire trade agenda, starting with the withdrawal early in his presidency from the Trans-Pacific Partnership, a 12-nation Pacific Rim free trade deal. The other signatories to the deal, including Japan, have announced plans to go ahead with a scaled-down free trade pact without the U.S.
“We don’t have the possibility of a bilateral [free trade agreement] with the United States in mind,” Mr. Nonaka said in an interview. “Even if there could be some alternative routes to negotiate with the United States, we believe that the TPP rules we have negotiated would be the best possible terms and conditions.”
Mr. Perdue acknowledged the farm community’s “legitimate anxiety about the plight of international trade” but echoed Mr. Trump’s plea for patience from American consumers and producers.
“It’s like a weight loss program: When you first start, it doesn’t feel very good,” he said. “But then you feel much better in the end when you get healthy, and that’s what American farmers want: a healthy international trading system.”
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