SULPHUR — Twenty percent of the food exported throughout the world originates in the United States. Agriculture production accounts for about $13 billion annually and more than half of that — $8.3 billion — is sold outside our borders.
“Trade increases the wealth of a nation,” said Mike Strain, Louisiana Commissioner of Agriculture and Forestry.
Strain, who was elected in 2016 to his third four-year term as commissioner, was the guest speaker this week at the monthly meeting of the West Calcasieu Chamber of Commerce.
According to Strain, beyond agriculture, the U.S. is the largest exporter of liquified natural gas in the world, and is rapidly becoming the largest exporter of energy overall. He said Cameron LNG alone can supply one-sixth of the European Union’s total LNG needs. The facility exports $10.2 billion (in 2011 dollars) annually.
Strain said the U.S. has 300 years’ worth of natural gas.
“We are rich, rich, rich in natural resources,” Strain said. “And those natural resource-based industries are the foundation of our economy.”
Those resources are brought to market by rail and by ship.
In October, the state will begin dredging at the head of the Mississippi River to allow for a draft of 55 feet to accommodate super cargo ships, (1,100 feet long, 300 feet wide), which Strain said will soon carry 20 to 30 percent of all cargo. He said those ships are returning to their points of origin empty after delivering imports in the U.S.
“We need to make sure that they are full,” he said.
He noted that no other nation has an asset like the Mississippi River. Thirty-three states and two Canadian provinces move products down the river to be exported around the world. Strain said 60 percent of the agricultural wealth this country exports makes use of the river.
Five of the largest ports in the U.S. are located in Louisiana. The Port of Lake Charles, ranked in the top 10 in the U.S., is only 24 miles from the coast.
“The Port of South Louisiana — from Baton Rouge to New Orleans, not counting them — is the largest tonnage port system in the world,” Strain said. He said as part of the federal infrastructure package, all ports and harbors will be expanded and dredged, using matching state funds.
With regard to agriculture, Canada is this country’s top trading partner, at about $21.9 billion annually. Mexico is second at about $19.7 billion and China comes in third at around $19.5 billion.
“Right now, all eyes are on China,” said Strain, referring to the ongoing trade negotiations with the country. “We get them to the table, we pull back, we get them to the table, we pull back,” he said. “And now, there’s all the pressure in the world to get them to the table.
“So what’s the big deal when China says, ‘We’re not going to buy anymore?,’ “ Strain asked rhetorically. “Well, 60 percent of soybean production in the United States goes to one customer — China.”
Strain listed a $600 billion trade imbalance, currency manipulation, and the reverse engineering of intellectual property as sticking points in the negotiation. He said Xi Jinping, China’s president, offered to cut the trade imbalance in half to $300 billion. Strain said the administration’s position is to decline anything but fairness across the board.
“Why is he resisting?,” asked Strain. “Because under their government’s system, it’s very difficult for their economy to work unless they’re in a superior position with trade.”
He said Xi continues to negotiate because China’s economy is suffering.
“For every dollar we have in our economy, we have a dollar in national debt,” said Strain. “The ratio in China is $1 to $2.75.”
Locally, Louisiana exports about $60 billion worth of commodities, with $15.8 billion of that in agriculture — $10.7 billion of which is soybeans. The state’s biggest clients are China, Mexico, The Netherlands, Brazil and Canada.
Strain said the U.S. is renegotiating trade deals with “everybody.”
“USMCA? We need to ratify it now,” he said. The first United States Mexico Canada, USMCA, trade agreements were hashed out more than 25 years ago. As a result, Strain said trade grew more than ten-fold. He said Mexico’s government has signed off on the latest iteration of the agreement.
“They even put in additional stipulations for their labor pool — for how they have to treat their employees,” he said. “We need to ratify Canada.”
The U.S. is also renegotiating with Japan, the E.U. and all other major economic markets. Strain said the negotiations will put more pressure on China to accept our terms.
“We’re saying if you’re not at the negotiating table, you’re not going to be invited to the dinner table,” he said. “We will no longer trade prosperity for peace.”
He likened trade imbalances to high-interest credit cards.
“It hurts our economy,” he said. “As part of this administration’s policy, tariffs are being used in response to unfair trade practices and retaliatory actions.”
Strain said the U.S. needs to negotiate more free trade agreements. The number of U.S. trade agreements has remained flat over the last several decades, while the number of agreements worldwide has skyrocketed.
“Every trade agreement helps us,” he said. “Free trade agreements set down the rules of engagement. We want to know what the rules are. We want stability.”