US TRADE POLICY—WHAT NEXT? Joe Glauber International Food Policy Research Institute
Governor’s Conference on Agricultural Trade Richmond, Virginia 6 March 2017
6%
1850 1855 1860 1865 1870 1875 1880 1885 1890 1895 1900 1905 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
US net exports as percent of GDP 8%
Surplus driven by productivity growth (Gordon)
4%
2%
0%
-2%
-4%
-6%
-8%
Growth in global consumption Annual growth rate (%) 3.5 3.0
2.5
Global population growth rate
2.0 1.5 1.0
0.5 0.0 Rice
Wheat 2004/05-2013/14
Corn 2014/15-2023/24
Source: USDA, PSD database; ERS international baseline
Soya
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Growth in global agricultural trade
Bil USD
2,000
1,800
1,600
Launch of Doha Round
1,400
1,200
1,000
800
600
400
200
0
Source: WTO
Growth in trade volumes, selected product groups 300%
250% 200%
Oilseeds Wheat
150%
Rice
100%
Feed grains
Beef and veal 50%
Swine
0%
Poultry
Source: USDA, PSD database
Growth share of developing country imports come from other developing countries Bil USD 400 350 300 250 200 150 100 50 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 South-South Source: UNCTAD
North-South
Growing share of developing country exports go to other developing markets Bil USD 400 350 300 250 200 150 100 50 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Exports to Developed Markets Source: UNCTAD
Exports to Developing Markets
Largest Developing Country Exporters 2013 Exports Billion USD
Change from 2009
Share to Developing Markets
Brazil
84.6
+59%
66%
China
46.1
+65%
56%
India
41.8
+188%
79%
Argentina
40.6
+50%
74%
Indonesia
34.7
+67%
68%
Thailand
32.7
+53%
67%
Malaysia
26.5
+47%
76%
Mexico
22.0
+52%
12%
Ukraine
16.1
+83%
59%
Turkey
16.1
+58%
56%
World
1,502.7
+49%
39%
Source: Flake and Flake (2015) and UNCTAD (2015)
US Agricultural Trade Bil USD 160 140 120 100
80 60 40
20 0 1970
1975
1980
1985
1990 Balance
Source: USDA, FATUS
1995 Exports
2000 Imports
2005
2010
2015
US Ag Trade by Destination Bil USD 30 25 20 15
10 5 0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Japan
EU
Canada
Mexico
China
Top US agricultural export destination Bil USD 30 25 20
15 10 5 0 197019721974197619781980198219841986198819901992199419961998200020022004200620082010201220142016 European Union
Japan
Canada
China
Composition of US Ag Exports to Top 5 Destinations 18
Bil US
16
14 12 10 8 6
4 2 0 Canada Bulk Total
China Intermediate Total
Mexico Consumer Oriented Total
Japan
EU
Agricultural Related Products
Source: USDA, FATUS Imports Exports
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
US Agricultural Trade with Canada
Billion USD
25
20
15
10
5
0
US Ag Exports to Canada, 2014-16 Soybean Meal Chickens, Fr/Froz Essential Oils Pork, Prep/Pres Pork, Fr/Froz Wine Lettuce, Fr Other Veg Oils/Waxes Other Dairy Prods Other Veg, Fr Related Sugar Prod Berries, Fr Chocolate & Prep Coffee Beef & Veal Fr/Froz Other Veg, Prep/Pres Beverages Ex Juice Other Feeds & Fodder Misc Hort Products Other Grain Prods 0.0
0.5
1.0
1.5
2.0
2.5
Bil USD
US Agricultural Trade with Mexico Bil USD 25 20 15
10 5 0
Exports
Source: USDA, FATUS
Imports
US Ag Exports to Mexico, 2014-16 Feed Grain Prods Beef Variety Meats Turkeys, Fr/Froz Rice-Paddy, Milled Beverages Ex Juice Seeds, Field/Garden Other Grain Prods Cotton, Ex Linters Cheese Chickens, Fr/Froz Nonfat Dry Milk Other Feeds & Fodder Wheat, Unmilled Related Sugar Prod Misc Hort Products Beef & Veal Fr/Froz Soybean Meal Pork, Fr/Froz Soybeans Corn 0.0
0.5
1.0
1.5
2.0
2.5
Bil USD
US Agricultural Exports to China Bil USD 30
25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
US agricultural exports to China, 2013-15 average Product Soybeans Feed grains Hides and skins DDGs Cotton Dairy Pork and products Other Total Source: USDA, FATUS
Bil USD 12,766 1,632 1,473 1,421 1,390 617 535 7,026 26,861
Percent 47.5 6.1 5.5 5.3 5.2 2.3 2.0 26.2
Food processing sales of US affiliates in selected markets Sales (bil USD) 70
60 50 40
China
Mexico
30
Canada
20 10 0 2009
2010
2011
2012
Source: US Department of Commerce, Bureau of Economic Analysis
2013
2014
Conclusions • Effects of a trade war on US agriculture—SAD! – NAFTA partners and China are the top 3 export destinations accounting for over $57 billion in ag exports (FY2016) and food processing sales by US affiliates in those countries of a roughly equivalent magnitude
• If this is, as some suggest, just a “reset” in US trade policy, then concessions will likely have to be made through negotiations • If renegotiation efforts fail and unilateral actions result (eg, tariffs raised) => one can expect others to follow • US agricultural trade could suffer collateral damage in a trade war over manufactured goods • Alternative suppliers of agricultural goods means US agriculture remains vulnerable