I have heard it said many times the last few years that agriculture has been the bright spot in California's lagging economy. All data suggest that fair and open trade with foreign markets plays a significant role. In fact, the U.S. Department of Agriculture just announced – in its words – "an astonishing trend" for U.S. farm exports, which are on track to grow to $145 billion in 2013, up from $96 billion in 2009, or more than 50 percent in a relatively short period of time.
California agriculture represents an equally impressive 13 percent of that total. While there are many factors that contribute to this surge in foreign trade, the move toward free-trade agreements is one trend that cannot be overlooked.
The last two decades of FTAs have been turbulent ones. Per the rules, a negotiated free-trade agreement must pass both chambers of Congress and receive the approval of the president before ratification, a high hurdle to meet within the highly partisan environment in Washington. Even with a Republican-controlled federal government in the early 2000s, trade votes, such as the Central American Free Trade Agreement, passed Congress with only razor-thin majorities.
Bleak Outlook In 2008
For the strongest proponents of free, fair and open trade, the lowest point began in 2008 when a broad protectionist sentiment swept across America almost in tandem with the sinking economy. At that time, three bilateral FTAs negotiated by the Bush administration seemed to be indefinitely tabled by a new Democratic majority in Congress. Meanwhile, presidential candidate Sen. Barack Obama's campaign pledged to renegotiate the North American Free Trade Agreement. All things considered, it would have been easy to believe that the two-decade trend toward free-trade agreements had drawn to an end.
Things began to change shortly after President Obama took office. He almost immediately backed away from the tough NAFTA talk, and in his 2010 State of the Union speech he announ-ced the National Export Initiative, an effort to double exports in five years as a way of providing a boost to the ailing economy. By June, the administration began the first round of negotiations as part of the Trans-Pacific Partnership, an FTA covering nine nations that will likely expand in the near term.
These promising signs were somewhat overshadowed by news of other nations aggressively entering into trade agreements. One such agreement that is nearing ratification is a negotiation between the two largest trading partners for the United States: Canada and the European Union.
Value Of Free Trade
As we compete with Canada and developing nations for a share of the EU market, we are encouraged by free-trade talks between the United States and the EU during the past year. Unlike many earlier FTAs, there is almost no one who is severely opposed.
Businesses and trade groups want the deal. If anything, these groups understand that a successful FTA with the EU would address tariffs as well as non-tariff barriers such as subsidies, sanitary and phytosanitary issues, and maximum residue limits that have stifled agricultural trade.
Overall, California farmers and ranchers have benefited from robust European trade for years. With a firm place as our second-largest export destination, the European Union purchases more than $2 billion of California-produced agricultural products, roughly 20 percent of its agricultural exports from the United States.
Almonds lead the commodities exported to Europe by a large margin, accounting for nearly 40 percent of that total, while wine is at 20 percent, and walnuts come in at more than 10 percent.
The Europeans love our pistachios and raisins, with a broad swath of grains, fruits, vegetables and nursery crops rounding out the list of top exports to Europe.
Fortunately, we have strong allies in Congress, such as the incoming chair of the House Ways and Means Trade Subcommittee, Rep. Devin Nunes (R-Visalia), who recently introduced a bill to authorize the administration to enter into negotiations with the EU. We look forward to working with the new 113th Congress and the administration on ways to be aggressive in opening and expanding new markets for California agriculture.
Josh Rolph is director of international trade, farm policy, taxation and plant health for the California Farm Bureau Federation. He may be contacted at email@example.com.