October, 1997

Fruits of Thought

Food Safety And Free Trade

The President is requesting statutory authority to restrict the imports of fruits and vegetables from countries that do not meet certain food safety standards. Since nobody desires to have unsafe food in the food supply, this is, at least on the surface, unobjectionable.

The primary opposition seems to be coming from quarters that feel that the whole plan is a ruse designed to reduce the opposition to grant “fast-track” authority to the President to negotiate more free-trade pacts, first with Chile. In other words, one of the arguments against such pacts is that they make it too difficult to ensure the safety of the food supply. Separate legislation addressing the point could serve to remove food safety concerns as an impediment to granting fast-track authority.

Fast-track authority, per se, is basically unobjectionable. All fast-track authority means is that Congress agrees to vote yea or nay on the agreement the President negotiates with a foreign power. In other words, Congress can approve or disapprove of a proposed agreement but, under fast-track cannot amend the agreement. Fast-track is essential to negotiating agreements with foreign countries because, in its absence, countries will refuse to make compromises knowing that whatever they compromise on, some Representative or Senator is bound to demand another concession. The opposition to fast-track, and it is a strong opposition, is really fighting the battle against the concept of free trade.

The whole food safety issue in relation to trade is complex. Increased travel, tourism and trade is bound to lead to the worldwide spread of all kinds of viruses, bacteria and parasites. Yet, of course, where one party sees a food safety issue, another party sees a trade issue. A failure to appreciate the complexity of the situation is exacerbated as the media plays up as cut-and-dried issues that are, in fact, subtle and complex. The case of cyclospora and Guatemalan raspberries is a case in point: this is the big example of possible tainted imported food and a situation that did real harm to domestic berry growers.

Yet, we have only a vague understanding of cyclospora, and the Center for Disease Control still hasn’t found any on raspberries. Based on the finding of cyclospora in the stools of people who ate the Guatemalan raspberries, the CDC guessed that the parasite was in the water in Guatemala with which the berries had been sprayed and irrigated.

To the U.S. it is a food safety issue, but in the absence of finding cyclospora on the berries, the Guatemalans perceive it as a trade war tactic.

The Guatemalan raspberry situation is almost ironic, and it encapsulates the fundamental decisions that have to be made about our attitudes toward trade. Raspberries are not a traditional crop in Guatemala. Raspberries are grown solely to capture the North American market. The planting was encouraged by international development agencies, the U.S. government and American importers.

This encouragement, which included funding from the United States Agency for International Development, was based on a premise that the U.S. will be better off if we live in a more prosperous world and that encouraging trade, including encouraging poorer countries to sell what they can, is a route to encourage prosperity throughout the world.

The logic is simple: U.S. consumers benefit from a greater variety of products offered at better prices, and poorer countries benefit by having a market for their wares.

Continuing with this logic, the solution to food safety problems overseas is clear — we have to help less developed countries rise to our standards of sanitation and hygiene.

The problem is that many have never bought into the logic that says that we will be more prosperous by living in a free-trading, more prosperous world. As such, food safety problems become not problems to be solved but, instead, an opportunity to block the expansion of trade and, perhaps, reverse past trade liberalizations.

The political problem with trade liberalization is a classic one. The benefits of free trade are diffuse, but the costs are highly concentrated. If a given produce item comes into the country inexpensively, then, of course, hundreds of millions of Americans gain because they each spend a few quarters less each week on that item. On the other hand a small number of U.S. growers may be devastated by that same decline in price. The benefit to consumers in general may well outweigh the cost to the producers but, politically, no family is likely to fight very hard to keep its bill for a particular product a quarter a week lower, whereas industry members, with their livelihoods on the line, will fight hard indeed to save their businesses.

My biggest concern with those who fight to restrict foreign imports is that they distract themselves from the real work at hand. For a time, of course, politically powerful interests in the U.S. may stop trade agreements or get restrictive rulings, but there are forces at work that are far more powerful than those of day-to-day politics. Over time, the tremendous benefit of what economists call comparative advantage — basically the idea that it makes sense for each entity to produce what it does best and trade with one another rather than to try to produce everything internally — means that all societies will inevitably turn to expanded trade.

If we restrict bauxite imports, for example, our domestic airplane industry will be unable to export because the raw material in the production of aluminum is bauxite. So, the interlinking of industries requires each nation to source the best product at the lowest price no matter where it comes from. Anything else is just a holding action until that day comes along.

The real problem with import restriction is that it leads the domestic industry to remain uncompetitive. The important question is what can each segment of the produce industry do to ensure that the products we produce here in the USA are the best quality and value for Americans and citizens around the world?  pb