Another Failure of the Vision Thing

DENNIS T. AVERY

January 07, 1992|By DENNIS T. AVERY

Indianapolis, Indiana. -- The Australian farmers who burned a U.S. flag in front of President Bush last week graphically demonstrated what a sad, ill-considered trade mission the president is leading in Asia.

At his first stop, Mr. Bush told the Australians he was determined to ''protect'' U.S. farmers with subsidies. Perhaps no statement in his public career has so clearly revealed his weakness in economics.

The Australians are our natural allies in the desperately-needed effort to knock down world farm-trade barriers! The farm-trade expansion that resulted would exploit one of America's huge, real comparative advantages in world trade. (And one of Australia's too.)

It is absolutely certain that the world's demand for farm resources will triple in the next four decades -- with most of the demand growth in Asia. The world's population will double again before it stabilizes about 2050, with most of the increase in Asia. Most Asians are currently eating a low-protein diet, and are eager to upgrade it.

The U.S. could expect to seize about 40 percent of any farm-trade expansion, as we did in the 1970s. We are the only country that cuts its per-unit farm costs by expanding production. Other food producers would have to make big investments in roads, dams, processing plants and other infrastructure to expand. But 25 percent of our cropland is ''set aside'' at taxpayer expense. Our farm infrastructure is already built -- with a third of it collecting rust instead of paying taxes on profits. (Some of that rust is gathering at the port of Baltimore.)

The world's environment will be put at far greater risk if Asia tries to produce a high-quality diet from its own farmland (already more intensively used) than if the food is imported from Iowa or Australia.

The president's own effort to free up the farm-trade rules of the General Agreement on Tariffs and Trade has been stalled in Geneva by the European Community. The crucial thing is getting access for form imports in such fast-growing Asian economies as China, India and Indonesia.

Mr. Bush has put all his recent trade emphasis on a hurry-up

effort to boost our car sales to Japan. He even took along a group of Detroit auto moguls whose main response to Japanese competition has been higher car prices and bigger bonuses for themselves. Now they're going to correct the trade deficit by selling Japan more of our big cars? Japan can't even find parking for its own small cars. Literally, every Japanese who has a legal parking space already owns a late-model auto! No wonder our few sympathizers in Japan feel embarrassed about this trip.

The export-earning potential of farm sales to Asia is far greater than anything we will ever realize from auto-industry exports to Japan. Moreover, other major U.S. trade gains would also flow from proposed new GATT rules for services and intellectual property. But everything in the current GATT round of negotiations is stalled by the farm-trade impasse.

If the president is so worried about our farmers, he should level with them about trade and subsidies. Farm-export growth is the only prescription likely to keep American agriculture healthy in // the next couple of decades. The U.S. is now a declining market for farm resources. Our stable, aging population is already shifting from bacon and eggs to oatmeal. (It takes only one-fourth as many farm resources to produce the oatmeal.) And new technology keeps raising our food-production potential.

President Bush may also find delivering on his farm-subsidy promise as difficult as delivering on his ''no new taxes'' pledge. U.S. farm subsidies have risen from $1 billion in early 1970s to $6 billion in late '70s -- and are now running about $12 billion a year. They could double again in the next decade if enough federal revenues can be found to keep the current promises to farmers.

One big farm problem: We are about to lose our Soviet grain sales, because the Soviet republics will now become self-sufficient in food. Soviet farmers have just gotten real incentives to boost food deliveries for the first time. The Soviet Union had been taking 15 percent of the world's farm exports, including much of the surplus from both the U.S. and the European Community. Within five years, those food exports to the Soviet republics will be gone.

The other big farm problem is that modern science has given the world's traditional farm-trade barriers enormous new power -- and made them hugely more expensive. Until the 1970s, the European Community imported 30 million tons of grain a year. Now it uses high-powered seeds and intensive pesticide sprays to export 30 million heavily-subsidized tons per year. Saudi Arabia has bought center-pivot irrigation sprinklers to turn its desert green -- and produce 2 million tons of surplus wheat per year.

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