U.S. agriculture is dependent on the international market.  The U.S. has long been a proponent of developing opportunities for trade through multilateral, bilateral, and regional trade agreements.  Recent events, however, including the U.S. withdrawal from the Trans-Pacific Partnership (TPP) and the announced renegotiation of the North American Free Trade Agreement (NAFTA) create uncertainties with respect to their implications for U.S. agriculture.  The U.S. decision to withdraw from the Paris Accord creates uncertainties on the environmental front that will affect U.S. agricultural trade, both with respect to the reaction of countries that are markets for U.S. agricultural products as well as our ability to compete through the elimination or reduction of environmental regulations.  While the U.S. Secretary of the Treasury has been directed to label China a currency manipulator, the tremendous economic growth in the United States only adds to U.S. purchasing power and exacerbates the Chinese trade surplus with the United States.  At the same time, the Secretary of Commerce and the U.S. Trade Representative have been directed to identify all foreign trading abuses that unfairly affect American workers and use every tool under American and international law to end those abuses immediately, which will potentially result in retaliation.

Although there is much evidence of a change in the stance of the U.S. with respect to international trade, it is important to note that the global context is changing as well.  Evidence of this can be seen with Brexit, as the United Kingdom’s (UK) vote to secede from the European Union will create the need for renegotiation and modification of numerous trade agreements involving the UK and the EU.  The UK will be forced to develop or renegotiate pacts with the United States as well as with our competitors and customers.

The problem that comes to the fore is that it is often unclear what the implications of these actions will be for agriculture and related interest groups.  During the period of 2006-2016, U.S. agricultural exports rose from $70.95 billion to $134.71 billion a 90 percent increase. Imports rose from $65.46 billion to $114.44 billion, resulting in a positive agricultural trade balance that nearly quadrupled from $5.49 billion in 2006 to $20.27 billion in 2016 (ERS and FAS, 2018).  Given the importance and growth of international agricultural trade for U.S. agriculture and the U.S. economy, there is a need to determine the specific consequences for agricultural trade of these actions mentioned above.  These implications include trade creation, destruction, and diversion impacts, as well as price, quantity, and welfare implications for various interest groups, including agricultural producers, agribusiness, consumers, and the environment.

The principal benefits of this research include information pertaining to trade, supply response, import demands and export supplies, land values, price variability, agricultural value added, food safety, the environment, and emerging bio-energy issues. Improved competitiveness of the U.S. in international food and agricultural trade is expected to strengthen the employment base and increase income levels in respective states.

Research conducted within the proposed project will primarily address ESCOP Priority Area Goal 1, AN AGRICULTURAL SYSTEM THAT IS HIGHLY COMPETITIVE IN THE GLOBAL ECONOMY. Research will specifically address needs pertaining to sub-goals: G. Competitiveness in international markets and J. Public policy & economics of agricultural production systems.

Previous multistate projects have focused on the development and modification of domestic agricultural legislation through the Farm Bill.  While analysis of new domestic farm legislation will be an important objective of this project, the potentially dramatic shift in U.S. trade policies that is being proposed could have major implications for all groups and sectors associated with U.S. agriculture.  With these changing conditions and potential renegotiation or withdrawal from existing trade agreements, the objectives of this research focus on the emerging issues and opportunities associated with agricultural trade and the global market environment during the next decade.

If this type of analysis does not go forward, stakeholders will have incomplete information with respect to the economic impacts of changes in agricultural trade and the global market environment. While various commodity groups may have analysts who investigate their specific commodities and the related policies, the proposed work in this multi-state project will bring together a team of researchers to assess trade and policies across multiple commodities and products.

Multi-state Collaboration: The list of policy and trade issues available for research is a long one. Only with multistate collaboration can the researchers select a relevant subset that focuses on the most current, critical issues. In so doing the analysis provides results that transcend state lines. In addition, individual researchers will apply different methods and models to a selected trade or policy issue. The collective results will give a perspective that addresses the multi-dimensional aspects of an issue.

The body of work proposed here will contribute to the understanding of agricultural trade and policy. As a group of researchers from multiple institutions, the output of this work will address the multifarious needs of the agricultural community and policy makers. As these constituencies are interested in a diverse group of products and policies both nationally and internationally, the collaboration of this project will address many of these different interests. The analysis will advance the science of economics of trade and policy in agriculture with new empirical techniques and new data.

The outcomes of this research are expected to have positive consequences for numerous stakeholders associated with the U.S. food and agricultural sector. This includes agricultural producers, consumers, agribusiness firms, rural communities, policy makers, farm organizations and related constituencies in order for them to have the information necessary for informed decision making and policy design.