Posted by on June 1, 2019 10:23 am
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By Andrew Langer, President of the Institute for Liberty

 

With the announcement that Fiat Chrysler is set to build a new plant in the Detroit Metro Area, it is clear that America’s shifting posture on trade is working—and with that, a crystallization of just what the “Trump Trade Doctrine” is.  For the longest time, trade was considered to be just another form of foreign policy, operating under the auspices of traditional international relations theory.

 

Trump’s Trade Doctrine changes this.  It recognizes that trade negotiations are fundamentally different from regular foreign policy diplomacy and, in bifurcating them, takes a fundamentally different approach.  Traditional international relations theory teaches that diplomacy (and diplomatic negotiations) are all about compromise, all about give-and-take.

 

But this new approach to trade recognizes the fundamentals of the interplay between the U.S. and its trading partners:  that when we negotiate, our trading partners aren’t interested in what’s best for the United States (something we should have realized a long time ago), and are out for what works best for themselves and their citizens.  Unfortunately, for too long, our trade negotiations have been about making deals that ultimately made America’s interests secondary.

 

We’re seeing the successes of this doctrine in a variety of trading circumstances—heavy industry, high-tech, consumer manufacturing.  And we’re starting to see these successes in the agricultural sector as well, as our trading partners are faced with dealing with our newfound aggression.

 

The Trump Administration needs to take this approach when it comes to sugar policy as well—as a new study by Texas Tech professor, Dr. Darren Hudson, makes clear.  To those familiar with the global trade in sugar, the bedrock conclusion of the report shouldn’t be too surprising: “Government intervention in the world sugar market remains extreme and widespread with a wide variety measures to support domestic sugar producers.”

 

Dr. Hudson studied primary nations engaged in the sugar trade—Thailand, Brazil, India.  He and his team at Texas Tech’s International Center for Global Competitiveness also looked more comprehensively at the global sugar market:  all of the nations within which the U.S. is currently engaged in trade talks, 21 countries in total, accounting for roughly 4/5 of both global sugar exports and global sugar production.

 

His report is one more piece of evidence confirming what farmers here at home have been saying for decades:  that the global sugar market is massively distorted by subsidies other nations put in place to undercut American sugar producers and drive them out of the marketplace.

 

In a summary of the report written for the website Agri-Pulse, Dr. Hudson offered greater explanation. Calling it, “the world’s most distorted and volatile” marketplace, Dr. Hudson went on to say that:

 

More than 100 countries produce sugar and every single one of them subsidizes production in some way. With so many subsidized producers and so many different forms of subsidization, it can be hard to keep it all straight… These subsidies all affect the world market, and as prices continue to fall, I predict that more government policies will be passed to help producers weather the storm. Ironically, each new policy passed by a sugar exporter further distorts the market and necessitates additional subsidies, creating a downward spiral.

 

What Dr. Hudson’s commentary, and the study, make clear, is that as President Trump continues to deploy this new trade doctrine, the interests of America’s sugar farmers must be rolled into it—recognizing the clear realities of what a professor at a major research university terms as the world’s most-volatile and distorted.

 

U.S. Rep. Ted Yoho (R-FL) has long led the way with a policy called “Zero-for-zero” – the idea being that the US doesn’t disarm its protectionist policies until other nations do so.  It should be an essential element of the Trump Trade Doctrine, a tool fundamentally at the heart of a negotiating posture that doesn’t place American interests as secondary to the people with which we are negotiating.

 

The nation is beginning to see the real world implications of a new approach to trade.  With any luck, this new doctrine of trade will become the standard for years to come.

 

Andrew Langer is President of the Institute for Liberty.  He holds a degree in International Relations from the College of William & Mary.