USMCA: A Modernized Trade Agreement for South Dakota Producers
By Governor Kristi Noem
In 1994, no one would have imagined that you could search the Internet from a phone that you carry in your pocket. In 1994, people watching the original Lion King film wouldn’t have thought of a live-action remake. In 1994, no one would have guessed that the denim-dominated fashion they enjoyed would make a comeback 25 years later.
A lot has changed since 1994, but one thing hasn’t: our trade agreements with our closest international allies. For more than two decades, the North American Free Trade Agreement (NAFTA) has set the rules of trade between the United States, Canada, and Mexico.
These rules are incredibly important. Each year, South Dakota producers export $536 million worth of goods to Canada and $345 million to Mexico. They’re our closest trading partners. Now more than ever, we need an agreement that rebalances and modernizes the old rules of the road into a 21st century, high-standard trade deal that better serves the interests of farmers, ranchers, and businesspeople.
The United States-Mexico-Canada Agreement, more commonly known as the USMCA, does just that. It would increase potential for global trade while giving producers the stability to grow, invest, and create more jobs in South Dakota. It would be an incredible shot in the arm for producers, especially in the midst of historically low commodity prices and the largest federally declared natural disaster South Dakota has ever seen.
Through the USMCA, Canada’s unfair milk pricing will be eliminated so South Dakota dairy farmers gain more export opportunities. Poultry producers will have new access for chicken and egg exports and expanded access for turkey exports. Small businesses will benefit from new rules that make it easier to tap into foreign markets and participate in cross-border trade. There are big wins for the auto industry and new standards to improve wages and labor conditions.
I was proud to help negotiate this agreement when I served in Congress, and I’m grateful for the strong South Dakota support for the agreement through Senator Thune, Senator Rounds, and Congressman Johnson. But they can’t do this alone. It’s time for Democrat congressmen and congresswomen from ag-based districts to put pressure on Congressional leadership and bring this agreement to the House floor.
With 95 percent of the world’s consumers living outside our borders, it’s imperative we have a framework where our farmers and ranchers can thrive. If we can’t reach consumers on a level playing field, our growth is limited. South Dakota farmers and ranchers produce the world’s best products; those goods ought to be sold in a marketplace that is fair, open, and competitive. Now is the time for Washington to put people over politics, support American agriculture, and ratify the USMCA.
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There was a sincere hope that the governor of South Dakota would have mentioned the other trade war that is looming over South Dakota’s farmers and the nation at large in trade, manufacturing, logistics, ports of call, and the US shipping lines that are in great peril over the Trump’s follies. In a phone call with Roger Johnson, President of the US Farmers’ Union out of Washington, DC, Roger explained that the Trump trade war could end China’s consumption of South Dakota’s farm products for decades to come and as an expert in trade I completely concur as closing a trade faucet one cannot expect the water to flow once its turned back on.
While traders are befuddled across the nation and world on why this trade war even started, we continue to try and educate a far right populace in this country as to the dangers of a trade war and the consequences of such a no-win scenario trade wars possess, but to little avail to this administration and to the followers of the Trump cult. If anyone of an educated nature just looks at the basics of why Trump started this trade war with China or any nation for that manner under his target, you would see that there were no facts given that pointed to starting this trade war, but as a matter of fact is just a Trumpist ideology on helping his union followers and supporting union corporations who could not compete in the world market as long as China existed, while non-union manufacturers struggle under this unjust Trump folly as yet another collateral damage. China’s entire contribution to the US GDP consists of a 1.2% of goods entirely made in China destined for retail stores like Wal-Mart, Runnings, etc. and .6% of commodity goods in parts and raw materials destined for the nation’s manufacturers to be competitive in the production of their products. With freight, of primarily US corporations, the entire exposure to the US GDP is roughly 2.5% of the nation’s entire output of gross domestic product, a mere drop in the bucket for the US productivity. Furthermore, profiting on Chinese made goods in both retail and commodity sectors boasts up to 55% margins allowing companies like Apple and Nike to become the companies they are today.
Ask anyone today what the exposure of Chinese made goods in the US and you’ll get an answer like 70% or even higher because they fail to understand the facts and shop at Wal-Mart where much of the Chinese retail goods are shipped. Ask any expert in trade and find the largest contributor to trade problems are crooked US corporations causing a multitude of problems while evading US duties & tariffs for financial gain and with the absence of the federal government enforcing their laws stating they lack the funds to investigate.
Why source in China? Think about it. Today, US manufacturers cannot fill their employment ranks with US citizens as it is, let alone allowing Trump to have his way and force these factories back to the US where most of them never originated and products that could never be made in America (if you shopped at Wal-Mart you know what products I’m talking about) and at a price Americans would be willing to pay. US venture capitalists are not going invest in these type of goods and build factories at great expense and hire union laborers to fill these factories as the only way that would be possible is to import foreigners from impoverished nations who will work for less. There is much evidence of this in South Dakota. Venture capitalists in the US will strive to invest only in sexy industries including internet start-ups, high tech companies, or solar power sectors; retail and commodity goods be damned.
The big issue of course is the Trump conspiracy theorists misleading the American people stating China is stealing our IP, or as we have heard so often, the $500 billion dollar deficit between China and the US. That figure fails to account for Chinese imports of American products of roughly $180 billion and the $300+ billion that US corporations, manufacturing in China, and selling their products within China so in essence there is no deficit. What we do see, however, is the anti-China sediment of Trump and his conspiracy theorist advisors of Robert Lightheiser, current US Trade Representative and author of two anti-China books, Larry Kudlow, a supposed economist that has rarely been correct and predicted in 2007 that there would be no recession just prior to the Great Recession, Peter Navarro, who we all wonder why he is the White House trade advisor, and Steve Bannon, a former US Naval intelligence officer, that has hated China his entire life and actually would prefer we be in a real war with the Chinese government.
China has begun operations to supply their own agricultural products including soybeans because of the Trump follies for their own national security and this is the consequences of an ill-advised economic war started by a narcissistic chosen one as Trump thinks of himself. Whether Trump is the second coming of the Lord or the best president in the history of the world, his words, he just put a massive uncertainty into the lives of South Dakotan farmers and the entire economic system of the United States of America. The first time Republicans made this mistake was following the 1929 stock market crash when Congressmen from Colorado and Oregon, Smoot and Hawley respectively, passed the Smoot-Hawley Act that was historically blamed for the severity and longevity of the Great Depression. It was signed by a Republican president, Herbert Hoover under great distress with opposition actually getting on their knees begging Hoover not to sign it.
It is time that the South Dakota governor learn a little about the profession of trade and macroeconomics to better understand the massive misguided wars that Trump has started and the consequences of such wars. Nobody wins in a trade war, not even the chosen one.
China’s new trade partner, the number one producer of soybeans in the world has now got China’s business, as did others, and with a better quality soybean with a better protein content than what US farmers produce. This is a sign of US weakness and not an emerging People’s Republic of China. An emerging Chinese economy is really what Trump and the far right disciples are worried about, that is being number two economically and Trump is on the fast track in accomplishing this feat of dropping the US to the number two position in the world by his craziness. Trump’s winning hand is to kill the golden goose that laid the egg. He will sacrifice non-union manufacturers and farmers for one golden egg. Whose next on his list of crazy? Oh yes, France and its French wine.
Now Trump has ordered every company of US origin out of China. Is there a real war coming because of the chosen one? Chosen by whom? Trump should have been looking down when he made that statement.
Disclosure: I am a lifelong domestic and international trader in forest products, steel, and other commodities from and to the world markets including SE Asia, China, Russia, South America, Europe, Canada, and Africa.
Mr. Lassle’s blasphemous diatribe is the regurgitate of liberal pinkos in the failing New York Times and fake media at CNN and MSNBC. You are wrong, sir, and your comments are baseless and absurd. Trump is the best business mind we have ever had in the White House, and Governor Noem is the best CEO our state has ever had. #BestGovernorEver!
What’s it like to work at the Internet Research Agency?
Should I cancel my trip to Denmark because you said absurd? Red Rage, you’ve been clearly indoctrinated by the far right white supremacists and you are not a Republican. You clearly lack the consensus of the Republican party.