During an AP interview last week President Trump first mentioned a possibility of complete withdrawal from the 25-year-old NAFTA agreement. Today several outlets are reporting on a draft executive action to do just that.
BACKGROUND: One of the problems with the NAFTA trade agreement (and most other trade deals) has been that no administration ever reevaluates them to measure their long-term impact since implementation. It has been almost 25 years since Bill Clinton signed NAFTA (’94) and only now in 2017 is the Commerce Secretary Wilbur Ross evaluating the current value and measuring the economic impact to the U.S. in current terms.
Having spent over 30 years deep in the weeds on the actuarial side of trade and economics, I can guarantee you there’s a generational need to completely reset all frames of reference when it comes to imports, exports, and U.S. trade principles in general.
It is no longer worthwhile even beginning a conversation around the arcane concept of “free trade”, especially when discussing commodities and agricultural trade. The “free market” was structurally disassembled years ago when multinational corporations began using the business end of agriculture to create investment and global profit via Wall Street.
The BIG AGRICULTURE legislative lobbying groups are funded -much like the U.S. CoC- with multinational corporations and multinational investment banks. Agricultural prices, formerly referenced on basic supply and demand principles have been bastardized through global purchases, and contracts therein, of U.S. farm products.
Simple question to understand the dynamic: “If there is such a U.S. glut of raw milk, then why has the 10-year price of milk skyrocketed”? Within the answer to that question you realize the product is not domestic. It is controlled by multinationals, exported under controlled contract, and the domestic price (you pay) driven by global trade not domestic production/consumption (supply and demand).
The inverse (import pricing) is also true. We’ve been getting screwed by the multinational interests of global trade for decades. This is NOT ‘free trade’. The BIG CLUB owns the process (inputs and outcomes) and manipulates the market in their interests, not yours. There simply is no “free market”.
[TRANSCRIPT] – 3:14 P.M. EDT – THE PRESIDENT: Busy day. They had a very busy day — had a good day. We’re doing well, very well. Things are turning around. I know they’re turning around for you folks, so I just want to welcome you very much to the White House — special place — America’s farmers and ranchers.
I especially want to congratulate Secretary — now I can say, Secretary Sonny Perdue, who was just sworn in as the Secretary of Agriculture — (applause) — sworn in by Justice Thomas. And it was a beautiful ceremony, and we’re going to celebrate a little bit later, and that’s great. We’re very happy. And you had a good vote too.
After a lengthy confirmation process -the result of Democrats choosing to politicize, obstruct and delay the Trump administration- the Senate voted yesterday (87-11) to confirm Sonny Perdue as Agriculture Secretary.
Sonny Perdue came by his knowledge of agriculture the old fashioned way: he was born into a farming family in Bonaire, Georgia. From childhood, and through his life in business and elected office, Perdue has experienced the industry from every possible perspective. Uniquely qualified as a former farmer, agribusinessman, veterinarian, Air Force veteran, state legislator, and governor of Georgia, he is the 31st United States Secretary of the Department of Agriculture
Secretary Perdue was sworn in earlier by Supreme Court Justice Clarence Thomas, a fellow Georgian, and promptly went directly to the USDA to begin work. Here’s his introduction (skip to 4:41 for Perdue remarks beginning):
