To Trade or Not To Trade

November 30, 2010

International trade, in particular with South Korea and India, has been in the news as of late, in the wake of President Obama’s trip overseas.  It might leave some wondering why the issue is so important to the future of the U.S. economy.  After all, we keep hearing that the problem lies in domestic job creation, not international trade agreements.

Why are international trade agreements important?

It’s really a matter of math.  Only 5% of the world’s population lives in the U.S.—that means 95% of global consumers live outside our borders, and possess 75% of global purchasing power.  By 2025, population growth of 60 million is expected in the U.S. and 1.6 billion in the world.  That means even more consumers will be outside the U.S. in the future.

Why is this critical for agriculture?

Because agricultural production is already plentiful and efficient and we have the delivery system in place, and most of the world’s consumers are outside the U.S., it stands to reason that the ag sector is in prime position for exponential growth as world population grows.  Agriculture is the only sector of the American economy in which there is already a trade surplus.

The more we grow here and sell overseas, the more people we need to hire to do all of the growing, marketing, selling and shipping, and to work in all the associated support industries.  The Economic Research Service (ERS) says agricultural exports alone were responsible for 810,000 jobs in the U.S.  When you take into account the entire agri-food chain, 17% of the American workforce is already involved.

Why is it critical for the entire economy?

Can you imagine if agriculture—and the rest of the U.S. economy—had better and fairer access to foreign markets?  The pending Free Trade Agreement with South Korea alone could increase exports to South Korea by $1.6 billion, which, according to the U.S. Chamber of Commerce, translates into 200,000 new American jobs

Agriculture wouldn’t be the only beneficiary of increased trade.  Exports already support more than 10 million U.S. jobs.  27% of all manufacturing sector jobs are related to exports.  And U.S. jobs supported by exports pay 13-18% more than the national average.  All told, in 2009, the U.S. exported nearly $1.6 trillion-with-a-T in goods and services.  Illinois is the 6th largest merchandise exporter in the U.S—nearly 16,000 Illinois companies exported goods in 2007.

What could all those numbers look like with better access to overseas markets?  How many more jobs could we create?  How much more quickly would our economy be restored to full health?

There’s a lot of hard work ahead.  It will require leadership, responsiveness and accountability.  We in agriculture will do our part to help grow the job base, in addition to the crops in our fields.  But our elected officials need to help as well, by letting a little sunlight get through to foster some of that growth.

Wayne County Farm Bureau  - Fairfield, IL

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