The Foreign Service Journal, May 2009

28 F O R E I G N S E R V I C E J O U R N A L / M A Y 2 0 0 9 in the 20th century was trade liber- alization. Started in 1934, inter- rupted by World War II, and culminating in creation of the Gen- eral Agreement on Tariffs and Trade in 1947 and then the World Trade Organization in 1995, this policy reduced industrial tariffs from an average of about 70 per- cent ad valorem to around 7 percent today. The impact has been profound. According to the Peterson Institute for International Economics, U.S. annual incomes are $1 trillion higher, or $9,000 per household, due to increased trade liberalization since 1945. Today this impact goes unnoticed. The boon of trade liberalization is largely un- appreciated. This economic growth was accomplished without a re- duction of agricultural trade barriers. The long-post- poned push to liberalize trade in agricultural products came to life only in 1995, with conclusion of the WTO Agreement on Agriculture and Agreement on the Appli- cation of Sanitary and Phytosanitary Measures. The in- tent, as with industrial goods, was to reduce agricultural tariffs over time; to reduce and eventually abolish export subsidies; to reduce trade-distorting agricultural sup- ports; and to base food safety, animal health and plant quarantine measures strictly on the best available science, not protectionism. Knowing that achievement of the equivalent task with industrial goods took the better part of 70 years, agricul- tural negotiators assumed that their efforts would likely take at least that long, stretching well beyond the middle of the 21st century. But such a long view is difficult to maintain in the face of a global economic meltdown, im- mersion in two foreign wars, and a broad realization that the climate is changing faster than we had thought. Meanwhile, President Barack Obama’s new adminis- tration appears to be signaling that international trade is not a high priority. In his February address to Congress, the president did not mention Doha or outstanding free trade agreements waiting to be ratified. Furthermore, his budget proposal cuts the Market Access Program by 20 percent. Secretary of Agriculture Tom Vilsack advised USDA employees in a Feb. 12 all-hands letter that his top pri- orities are food safety and nutrition, sustainable agricul- ture, climate change, process improvements within USDA and rural development. Al- though one-third of acreage plant- ed to crops in the U.S. is harvested for export, trade was not men- tioned. If trade, literally the first prior- ity listed in USDA’s old strategic plan, is moving to the back burner, what new roles are unfolding for the Foreign Agricultural Service? Old Headaches … Today the world is resounding with calls for food se- curity in individual countries, as well as demands for pro- tection from imports by domestic producers suffering from slack consumer demand and high input costs. Uncertainty associated with global climate change complicates the out- look. Is the drought in California’s Central Valley an anom- aly or a precursor of a longer-term trend? Last year’s near-record cereal grain prices resulted in part from un- usually severe droughts in Australia and Europe. Are these coincidences or a trend? Put this picture together and it is clear that FAS’s task list is about to be expanded and redefined. For starters, we will continue the traditional prognostication of crop pro- duction, but try to use this to better assess the impact of cli- mate change. Instead of promoting trade liberalization, for the next several years we may find ourselves simply seeking to preserve the hard-won gains of the last few decades, and pushing back against those who would reim- pose restrictions in the name of food security and food in- dependence, and to protect their agriculture sectors in this period of economic stress. Though high compared to industrial tariffs, all agricul- tural tariffs among World Trade Organization member- states are governed by WTO rules. While some countries may raise tariffs to the maximum allowed (many member- states apply tariffs at lower levels than the bound rates), the new frontier of agricultural protectionism has already in- spired misapplication of food safety, veterinary and plant quarantine rules. Coupled with this is growth in the tech- nical stumbling blocks to international commerce that fall under theWTOAgreement on Technical Barriers to Trade. This spurred creation, during the 2006 agency reorganiza- tion, of a unit within the Foreign Agricultural Service to monitor and enforce trade agreements, as well as a unit dedicated to resolving sanitary and phytosanitary issues. F O C U S If trade is moving to the back burner, what new roles are unfolding for the Foreign Agricultural Service?