Grain and coal trains pass one another

Grain and coal trains pass one another on Montana Rail Link tracks west of Billings in 2014.

LARRY MAYER, Gazette Staff

Montana’s union Democrats praised President Donald Trump as he canceled a U.S. trade agreement the state’s conservative farm and ranch groups had hoped would boost the economy.

As promised, the Republican president formalized the United State’s withdrawal from the Trans-Pacific Partnership, a 12-nation trade deal with countries that buy $814 million in Montana merchandise annually, according to the office of the U.S. Trade Representative.

Trump said he would pursue trade agreements with individual nations.

Withdrawing from the deal was particularly disappointing for Montana wheat farmers. More than 80 percent of Montana’s wheat is sold to TPP nations in the Asia Pacific, including Japan, which is also a top-five buyer of U.S. beef. With more than $3 billion in annual sales, agriculture is Montana’s largest private economic sector.

“Certainly, I think we are a little big anxious about what this move means, in particular for beef, given the fact that 96 percent of consumers live outside the U.S.,” said Erol Rice, Montana Stockgrowers Association executive vice president.

Unions welcomed the cancellation of TPP, which Montana AFL-CIO Executive Al Ekblad said was bad for manufacturing.

“Labor’s position on trade agreements has been clearly stated for the last 20-plus years,” Ekblad said. “We’ve been very clear that trade agreements are hurting workers at home and hurting workers in other countries with which we sign agreements. I reference to President Trump; he’s coming to a point of agreement with the labor movement. It’s a place that we’ve been forever.”

Montana’s federal delegation was mixed in its support for the trade agreement. Democratic Sen. Jon Tester hasn’t voted in favor of a trade agreement during his two Senate terms. In 2015, he voted against giving the TPP an up-or-down vote.

Sen. Steve Daines, a Republican, was noncommittal about the trade agreement, but Daines agreed to give TPP an up-or-down vote.

However, once Senate President Mitch McConnell of Kentucky declared TPP dead, Daines concurred, as did Tester.

Republican Rep. Ryan Zinke said he didn’t like Barack Obama’s track record on negotiations enough to give the executive a simple yes-or-no vote on TPP. Zinke wanted Congress to have the chance to change the trade deal, but concluded last summer the House wouldn't support TPP.

By the time the 2016 elections heated up, both Trump and Democrat Hillary Clinton were opposing TPP. There was a push by farm groups and the U.S. Trade Representative for approval of TPP before Obama left office, which fell through.

Withdrawing from TPP will not only hurt Montana’s economy but also the nation's, said Vincent Smith, Montana State University economist. U.S. manufacturing is not going to return to its 1970s heydays, Smith said.

“The world has changed. The truth of the matter is those jobs are gone. They’re not going to come back. Nobody can bring them back,” Smith said. “If we try to bring them back, we’re going to hurt a whole bunch of people even more.”

Free trade involves agreeing to terms for allowing products to cross borders with no conditions or minimal conditions. Things like tariffs, designed to increase the cost of foreign products to make them less attractive than domestic goods, are lowered or go away entirely.

Returning to tariffs means the cost of foreign products will increase. In cases where U.S. manufacturing is more expensive, which is most cases, domestic products also present consumers with higher prices. The cost of living goes up as a result, Smith said.

The United States has spent years advancing the TPP, while not pursuing bilateral trade agreements. A shift to those bilateral agreements will take months, if not years, during which U.S. exports will be sold at a disadvantage.

Australia, which is one of Montana’s biggest competitors for wheat sales in Japan, has already renegotiated tariffs lower than current tariffs on U.S. grain products. That disadvantage will exist until a bilateral agreement with Japan can be negotiated.

While TPP has failed in the United States, China has advanced its own trade policies, the Regional Economic Partnership and the Free Trade Area of the Asia Pacific.

Those China-led trade policies could set the table for trade talks in the Asia Pacific, becoming the foundation for any trade agreements the U.S. pursues bilaterally in the region.

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Politics and agriculture reporter for The Billings Gazette.