Restoring the Brand of Trade, February 13, 2007

Acceptance speech delivered by Warren R. Staley - Chairman and CEO, Cargill, Incorporated
Emergency Committee on American Trade Annual Trade and Investment Leadership Awards Dinner

Now, maybe more than even at the time of it’s founding, the Emergency Committee on American Trade, and its underlying mission is relevant to the survival of the American trade agenda. And I do not say this lightly. I believe that we are at a crossroads on trade. At stake is the openness of the entire trading system, here in America, and globally.

The surest evidence of the threat to trade liberalization is the resistance to ambition in the Doha round. Also, we are seeing a movement toward “FTA fever” taking hold outside the U.S. We run the risk of these many FTAs creating harmful trade diversions and being less rigorous and comprehensive than U.S.-based FTAs. Additionally, there is a rise in use of non-tariff barriers to trade and increased and arbitrary use of anti-dumping measures that are harming U.S. exports, especially agriculture exports, worldwide.

The “emergency” nature of this committee makes it relevant to the time and the challenges that we face, and there is no other organization more focused on the American trade agenda.

What’s the current emergency?

ECAT members and those that support its efforts have much work to do on restoring the “brand” of trade. We need to restore the faith and confidence in what trade can truly offer a citizen so that there is a renewed commitment to trade liberalization.

Rebuilding trade’s brand is going to require:

Let me elaborate. First, honesty. What does trade really offer?

Cargill has been a long-time proponent of trade expansion and open markets because at its core, trade creates jobs, increases incomes, and raises standards of livings for citizens

across the globe. In addition to these economic benefits, trade liberalization can enhance the social fabric of economies that choose to open their markets to foreign participation and investment.

For example, I recently traveled to Colombia to assess the investment climate there. I met with President Uribe and others. It became quite evident to me that an FTA with the U.S. is absolutely necessary for creating economic opportunities for the people of Colombia, and for enhancing social stability in the country. If we do not find ways to create opportunities for the poor and impoverished, desperation will result in social and political backlash.

So, if trade indeed enhances welfare, then why is trade liberalization so controversial and difficult today?

I would assert there has been a misrepresentation or a misunderstanding of what trade really is or can do…that is, the “brand” of trade has been both oversold and at the same time undervalued. The “advertisements” or “commercials” for or against trade are typically one-sided, and have not offered an honest and balanced picture of the effects of trade.

Trade cannot and will not solve all the serious economic, social, and political problems facing the world, and our own country. It is unrealistic to expect that by increasing trade among nations that the problems of global poverty, chronic hunger, starvation, unemployment, and inequality will be fully addressed. If that is the barometer by which trade is measured, if that that is the “product” that people think they are getting when they “buy-in” to trade, well then, there will be a lot of dissatisfied customers, and of course trade will disappoint and come under attack for not delivering on its promises.

To truly make progress on issues of poverty, hunger, and inequality the answer lies in leadership, education, opportunity, sacrifice, selflessness, and courage rather than whether a tariff line reads 20% or 10%. Please don’t misunderstand me this evening, trade is indeed an important part, and powerful tool, to create jobs and raise incomes around the world. But let us not burden trade with unrealistic expectations that ultimately serve to hinder advancement on these critical political, social, and economic issues of our time.

To build the brand of trade, we also need some introspection on the nature of protectionism.

Cargill is an agri-food company, as most of you know, so at the core of our advocacy for trade liberalization is the recognition of the right and need of every citizen across the globe to be able to feed themselves and their families by having access to safe, nutritious and affordable food. We share the vision, and understand our role in working to meet the Millennium Development Goals of reducing the number of undernourished people by half by 2015. According the UN statistics, globally, 800 million people today do not have enough food to meet their basic nutritional needs, and 35 million of those people reside here in the United States.

While trade liberalization cannot wholly solve the issues of poverty and hunger, we can all likely agree on this: if countries turn inward and turn toward protectionist trade and investment policies, the hunger problem will become worse, not better. We will jeopardize citizen’s jobs, incomes, security, and stability.

We simply do not have the luxury of time to slow trade liberalization or to turn it backward, not when we look at the challenges that we have ahead of us. By 2025, the global population is projected to reach nearly 8 billion. Most of that growth is in food deficit countries that do not have the resources such as land and water to support their own food consumption requirements. To feed our fellow human beings, trade is not an option, it’s a requirement.

Now, I certainly do not want to leave the impression that Cargill believes that those who oppose trade liberalization do not share the goal of eradicating hunger and poverty, of expanding opportunities for the world’s poor. In fact, it is often quite the opposite.

In the last 10 years many of the more vocal and active participants who appear to oppose more open trade have a core mission to eradicate hunger and poverty. When you look carefully into their positions, most of them are not anti-trade liberalization. In fact, some are asking more from trade liberalization efforts—from the developed world.

We have seen a real backlash against policies in developed countries that distort production and trade flows because of subsidies or import protections. We have not seen that same level of backlash against the policies of developing countries, however, that also heavily distort markets and that have price inflationary effects on developing country consumers. I believe this is because there is a real feeling in the developing world that the trading system is simply not fair. We are seeing this debate around the notion of “fairness” play itself out in the ongoing WTO Doha “Development” Round negotiations.

To address fairness in the system, introspection is required. It’s about each country looking in the mirror and acknowledging its own deficiencies in policy and asking the tough questions: are my country’s subsidies, export policies, or import protections good for my country? Good for the world? It seems to me that we need to accept that our bilateral, regional, and multilateral trade agreements still contain some harmful protections. And that is a problem. If we are interested in lifting people out of poverty, then we must take another approach.

After honest introspection, we detect unfairness in trade policies. How do we address that problem? This is where we need compassion.

The tension around trade liberalization and the notion of fairness has escalated here in the United States, where the arguments against opening markets are no different than those we hear in developing countries. There are parts of America that are feeling negative effects of trade through job losses and concern about foreign competition.

Quite frankly we think this is an issue that the advocates for trade have not adequately addressed – ourselves included. The brand of trade has been oversold. We collectively have made the arguments in support of trade because of evidence that trade liberalization benefits the overall economy. We have made those arguments without sufficient compassion for those disaffected by trade. There are those that have done extremely well with the opening of markets, and those that have not done so well.

What can be done to address fairness concerns and to continue to advance the benefits of trade liberalization for the world, and for our country? Adjustment and transition should be the words that guide us here rather than protection. Fairness should be about eliminating unevenness in the trading system. Fairness should be about adjustment assistance, not protection assistance.

In the case of job loss in the United States, adjustment assistance requires the need for a Trade Adjustment Assistance package that assists the disaffected and helps re-establish them as productive and employable citizens. While in developing countries, adjustment assistance may require increased funding for capacity building or longer transition times for cutting tariff and opening markets.

In a global or national context the benefits of trade are clear, but we simply cannot ignore the worker who has lost his or her job because of increased competition from trade, and has therefore lost access to critical benefits such as health insurance. It’s incumbent upon all of us to find creative, compassionate, and fair ways to address the downsides of trade.

Finally, trade needs a new brand, and that will require persistence.

Cargill remains committed to advocating for trade liberalization. We will persist in supporting the goal of free trade through WTO negotiations and comprehensive FTAs. We will also work with the broad membership of the trade community to drive for renewal of Trade Negotiating Authority in 2007. We will do this as a member of the newly launched Trade for America coalition. And we will support providing adjustment assistance to those who are negatively impacted by trade. We will re-launch our trade education effort, TradeWorks, to educate our employees, their families and communities on the importance of trade. We must continually strive to improve the lives of everyone in this interdependent world.

Restoring the brand of trade in America is going to take honesty, introspection, compassion and persistence. This will not be easy. But the best and fairest step that we can take for American citizens and citizens across the globe is to continue to trade with one another rather than place barriers between us.