A knucklehead trade strategy


Lawyers are fond of noting there are only three courtroom strategies to pursue in any legal case.
First, if the facts favor your client, argue the facts. Second, if the law favors your client, argue the law. And, third, if neither the facts nor the law favor your client, pound your fist on the table hard and often.
The messy Dubai Ports World deal – now to be restructured, although no one has explained exactly how – was table-pounding at its best.
The White House, oblivious to the sale until it exploded in its face, kept pounding and pounding until Congressional allies trotted to the White House to deliver the clear verdict: “It’s over; stop being knuckleheads.”
Graceful exit. Conservative pundits tried to give the Administration a graceful exit by claming the deal had been sunk by “xenophobes,” intolerant Americans who dislike foreigners. The more far-right the pundit, the more far-out the claim until America was made to be a nation of anti-Muslim bigots.
Oh, hogwash.
The deal fell through because the White House’s free-trade-at-any-cost strategy has become too costly for most Americans. Outsourcing American port operations and security to a suspiciously insecure and deeply insular Middle Eastern emirate is a bad idea anytime. Period.
The failed purchase, however, gives our leaders a long overdue opportunity to reexamine the White House’s bloated, failing and costly free trade strategy. Unbelievably costly.
According to March 14 Department of Commerce data, the current account deficit, the balance sheet of American trade in goods, services and investment, was a record $805 billion in 2005. That’s a staggering 20.5 percent more red ink than in 2004.
The trade deficit in just goods and services – forget investments, like the failed Dubai ports purchase – was $725.8 billion, up 17.5 percent from 2004 and easily the sickest trade deficit in American history.
Sickly. Even more sickly, the U.S. farm sector, reports Commerce, whose ag trade category is a broader measure of farm trade than the USDA’s, recorded a $4 billion ag trade deficit in 2005. (USDA, however, pegs 2005 ag trade a $4.7 billion winner.)
A breakdown of 2005 trade data by country shows 60 percent of our trade deficit accrued to just five countries. Those five, and the 2005 U.S. trade debt in billions, to each were: China ($210.6 billion), Japan ($82.7 billion), Canada ($76.5 billion), Mexico ($50.1 billion), and Venezuela ($27.6 billion).
Interestingly, USDA 2005 trade data shows that while the U.S. continued to run a $1.3 billion ag trade surplus with China, that nation’s total food, fish and forestry imports increased 5 percent even as similar ag exports ballooned 20 percent. In fact, China’s 2005 ag trade deficit was just $3 billion ($37 billion in imports; $34 billion in exports) or $1 billion smaller than the Commerce Department’s U.S. ag trade deficit.
Imagine that. The nation of 1.3 billion bellies – bellies that just a decade ago were to hunger for American food and fatten U.S. farmers’ wallet enough to substantially wean American producers from federal farm payments – is growing ag trade so rapidly that its farm trade balance was less red than ours in 2005.
Reality. More importantly, given America’s fast exploding current account and trade deficits as well our steadily eroding ag trade surplus (USDA pegged it at a fat $12.4 billion just three years ago), the facts no longer point to year-to-year blips or out-of-sync trends. These blips and trends are now reality; a reality built on the increasingly false notion that free trade will boost domestic job creation, reduce foreigners financing our federal budget deficits and, for American food producers at least, increase farm income.
Nothing of the sort has occurred and nothing on the horizon suggests it will occur. Instead, the American trade ledger increasingly is written in increasing amounts of red ink.
Our current account deficit will near $1 trillion in 2006; our trade deficit easily will top $800 million in 2006 and U.S. farm program payments are now estimated to top $23 billion this year.
By any measure, our pursuit of free trade has been a bust, and only a knucklehead would continue it.
(Alan Guebert’s Farm and Food File is published weekly in more than 75 newspapers in North America. He can be contacted at agcomm@sbcglobal.net.)

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Alan Guebert was raised on an 800-acre, 100-cow southern Illinois dairy farm. After graduation from the University of Illinois in 1980, he served as a writer and editor at Professional Farmers of America, Successful Farming magazine and Farm Journal magazine. His syndicated agricultural column, The Farm and Food File, began in June, 1993, and now appears weekly in more than 70 publications throughout the U.S. and Canada. He and spouse Catherine, a social worker, have two adult children. farmandfoodfile.com