Opinion: Trade Agreements: Good or Bad?

Those who forget the lessons of history are potentially destined to repeat the mistakes of the past. About 90 years ago, the U.S. economy was operating at full speed and labeled the “Roaring Twenties” in the post-World War I era. At this same time, Europe's economy was recovering from the wartime devastation and started producing again. Global overproduction emerged. This was particularly true for those in agriculture. Back then, agriculture and the rural economy was a larger part of the general economy. The Smoot-Hawley Tariff Act was being debated in Congress during the Fall of 1929 when the stock markets crashed. Signed into law in 1930, Smoot-Hawley increased tariffs on a wide range of imported goods. Unemployment rose in Europe, and around the world. In the U.S., it rose to 24 percent. More than 5,000 banks failed during the Great Depression. Thousands lost homes and farms because they couldn't make mortgage payments due to low prices, lost jobs, and bank closings. Some economists argue that monetary policy decisions contributed to starting the Great Depression, however, most agree Smoot-Hawley made things worse. The domestic economy did not pull out of the Depression until the end of the 1930s when World War II demand picked the economy up. The bottom line is either a nation agrees to the rules of trade or they don't. You cannot have it both ways. A nation that wants to export, must agree to imports. If there is no trade, then economic growth and incomes for the citizens are much more limited to resources and products that can be produced domestically within its borders. U.S. agriculture has the capacity to produce a lot more food and energy than we consume. People buy it internationally because it is cheaper than the alternatives. The emergence of mass markets also facilitates growth. In the United States, firms produce for one national set of product standards and market regulations instead of 50 states. The recent GMO labeling bill passed by Congress maintains the mass-market concept for the U.S. The European Union (EU) has a similar mass market. However with the Brexit vote, Europe may evolve into two sets of product and trade rules, which may add to the costs of trade in the region as Great Britain seeks full sovereignty, separate from the other EU members.