Two Ingredients for Cultivating Sustainable Growth: Trade Agreements and Regulatory Standards

*This post was adapted and condensed from my testimony to the United States Senate Committee on Finance on July 30, 2019. To read my full testimony, please click here.

On July 30, I had the honor of testifying before the U.S. Senate Committee on Finance about the importance of the United States-Mexico-Canada Agreement, or USMCA. I traveled to Washington that day to share the views of Corteva’s 20,000 employees and more than 400,000 customers – American farmers who have become essential partners for Corteva and, in truth, to each and every one of us.

Farmers are the linchpin to feeding the world’s growing population; our success and survival are intertwined with theirs. With that in mind, I traveled to Washington to address the critical need to pass USMCA to support employment and economic growth in farming communities across North America.

Corteva supports USMCA and the regulatory standard it comprises as a tool to stabilize markets, further expand and modernize North American trade and increase grower and consumer access to innovation. We believe promoting open trade is crucial, especially as agriculture is in a time of transition and increased demands.

Our customers feel intense pressures from weather, pests, unprotected intellectual property, and the need to grow global food supplies for a surging middle class in emerging markets. Yet, we are living and working in a time of great opportunity; an opportunity that USCMA can help us harness.

One example of that opportunity is encapsulated in a story I shared during my testimony. The story of two young, first-generation farmers: Andrew and Heidi Pulk from Wannaska, Minnesota.

When the Pulks began farming, they did what any good business owner does – they analyzed what they could best produce for the strongest market. They correctly saw an opportunity with soybeans in China and invested in the seeds, crop protection products and infrastructure needed to meet Chinese demand.

However, because of the trade challenges between the U.S. and China – something completely beyond their control – the Pulks have been forced to search for new market opportunities. The North American competitiveness zone was crucial to the Pulks continuing down their path as first-generation farmers. Last year, they sold their entire corn crop to buyers in Canada.

As we witness a surge in U.S. farmers nearing retirement, more than ever we need to support a path to success for young farmers like the Pulks. Passing USMCA will ensure that they and other farmers can thrive with the certainty of North American market access and of fixed rules of the road in today’s dynamic export-focused farm economy. That’s good for all of us.

Those fixed rules of the road also are multifaceted. Some of the most persistent barriers in agricultural trade are phytosanitary barriers, rather than tariffs. The gold-standard regulatory and sanitary/phytosanitary disciplines of USMCA ensure that stakeholders can provide meaningful input into rulemaking processes in North America, as well as significant advanced notice before new rules go into effect to allow farmers to adjust accordingly. 

Why are clear rules so important? Seed varieties can cross six international borders before being commercialized. This movement is critical to bring the highest quality seed to producers and requires consistent phytosanitary regulations. For example, each truck of commodity grain seed is worth upward of $50,000. If that truck is rejected at the U.S.-Mexico border because of surprise or inconsistent phytosanitary regulations, it costs $3,000 in return shipping charges, in addition to the loss of income from the truck in question. Rejected and delayed shipments cause quality reductions and dissatisfied customers that can result in long-term financial losses.

In concluding my remarks to the Senate, I noted that through the 25-plus years of NAFTA, not only did North America became more integrated economically, but our governments also established broad and deep relationships among our officials. Sometimes a frank discussion between trusted partners is worth its weight in gold. During the months of the USMCA’s negotiation, we saw the importance of that trust. We must pass USMCA to protect the North American competitiveness zone and look for opportunities to replicate this exercise in our other pending trade negotiations.

 I fully understand that fears linked to globalization and automation – with trade agreements as a scapegoat – can dominate the headlines. We must rise above these fears and find the courage to continue to open markets for farmers, businesses and all of us.