Exports are vital to U.S. economy as a whole, and are especially important to American agriculture. Over the past seven years, U.S. farmers and ranchers have exported $1 trillion in food and agricultural goods to countries around the world. Those exports account for 20 percent of total farm income and support more than 1 million American jobs. Every dollar of international sales stimulates another $1.27 in local business activity — helping Americans on and off the farm.
Simply put, our farmers and ranchers — and all of rural America — depend on access to international markets. The U.S. Department of Agriculture and the Office of the U.S. Trade Representative are committed to ensuring that American farmers and ranchers can compete and win around the world.
Trade agreements are one of the primary drivers of U.S. exports. They help grow foreign markets by reducing trade barriers and by creating rules that foster a more stable and transparent environment for trade and investment. They also provide strong enforcement tools so that when other countries don’t play by those rules, we can act aggressively to protect American workers, farmers, ranchers, and businesses.
As President Barack Obama said this week, “When American workers, businesses, and farmers have a fair shot to compete in the global economy, we win. And when other countries flout the rules to try and undercut American workers and farmers, we hold them accountable.”
We couldn’t agree more. That’s why this week, the Obama Administration launched a new trade enforcement action against the China at the World Trade Organization (WTO). This is the 23rd WTO case this Administration has brought — the 14th against China alone — and we have won each and every case that has been decided to date.
This new enforcement action takes on China’s excessive domestic price support for wheat, corn and rice — over $100 billion last year alone — which hurts U.S. agricultural exports by inflating local prices and creating artificial incentives for Chinese farmers to increase production. If successful, our enforcement action will put a stop to these excessive government supports, help rebalance global commodity markets, and allow American farmers to compete on a level playing field.
China is consistently one of the top markets for U.S. agricultural products. Since the country joined the WTO in 2001, it has gone from a $2-billion-a-year market to a $20-billion-plus market for U.S. farmers and ranchers. This is due, in no small measure, to the fact that China has cut tariffs and removed other barriers to trade. Currently, a quarter of all soybeans harvested here at home are exported to China, and the country is also an important destination for a host of other U.S.-grown products, from cotton, to meat and dairy, to processed foods.
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Despite this success, U.S. farmers and ranchers are adversely affected by China’s policies. For instance, the U.S. wheat industry estimates that China’s trade-distorting subsidies are costing U.S. wheat farmers nearly $700 million a year in potential revenue. When China joined the WTO, it committed to limit trade-distorting support, but it has failed to do so. As a result, many U.S. farmers are disadvantaged in China.
No one is saying that China cannot operate domestic farm programs. But these programs must comply with China’s international trade obligations. We are prepared to use every tool at our disposal to ensure countries abide by their international trade obligations, including the formal WTO dispute settlement process.
The Obama Administration has vigorously monitored and enforced our trade agreements, as evidenced by record-setting levels of agricultural exports and our perfect record in WTO dispute settlement. While this new trade enforcement action is against China specifically, the case highlights the seriousness with which the Obama Administration views all WTO members’ obligations to comply fully with their commitments.
l Tom Vilsack is the U.S. Agriculture Secretary and Michael Froman is U.S. Trade Representative.