Diplomacy & Crisis News

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Une étincelle peut mettre le feu à la plaine. Sans leader ni revendications précises, les émeutes de juin dernier en France rappellent d'autres protestations d'en bas, dont les révoltes paysannes de l'Ancien Régime. L'arrogance d'un président-monarque encourage les analogies : une rage mêlée de (...) / Violence, Histoire, France, Mouvement de contestation - 2023/09

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“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices,” wrote Adam Smith in 1776. That’s why it’s unsurprising that the cattle industry association R-Calf USA has a petition calling for tariffs on Australian and New Zealand sheep products.

The proposed tariffs would violate the free-trade agreement (FTA) between the United States and Australia. It has no chance of succeeding against Australia and would also raise lamb prices for American consumers. The petition makes baseless claims that Australia has inferior environmental and production standards despite Australia’s very stringent standards.

American lamb is expensive because the U.S. government has restricted poisonous bait for predators, disastrously affecting the domestic sheep population. Sheep farmers can blame their government and the environmental lobby for prioritizing the welfare of coyotes and foxes over ranchers and sheep. 

As the petition states, “The use of sodium fluoroacetate (compound 1080), a chemical compound once widely and effectively used as a poisonous bait in the United States by the sheep industry to control predators and thus reduce predation, was prohibited in 1972 (by the EPA) and later reauthorized with severe restriction in 1985.”

According to Meat & Livestock Australia:

 Lethal baiting is considered to be the most effective available method of controlling foxes and is cost effective over large areas. Ground baiting tends to be more effective and has a decreased risk of baiting non-target species than aerial baiting. There are strict restrictions on the availability and use of 1080 and persons using 1080 must ensure they meet appropriate state requirements and follow instructions.

If R-Calf USA felt they had a genuine legal dispute against Australian entities, they could seek to resolve their dispute through consultation as called for by Article 21.5 of the U.S.-Australia FTA. Failing that, according to Article 21.7, “where consultations are not effective in resolving a dispute, the Agreement provides for an arbitral panel to consider the matter.”

This option has been available since 2005, but the trade association has chosen not to pursue it because they are on weak legal ground. Instead, R-Calf USA has misrepresented the situation to Hill staffers and Members of Congress while obscuring the existence of the FTA and its parameters.

The petition presents a distorted view of free-trade agreements in general and even makes erroneous claims about other FTAs, such as NAFTA.

Instead of attacking popular imports from our closest allies, R-Calf USA should encourage the American sheep industry to innovate and lobby for changes to regulations concerning the necessary culling of predators of American sheep.

R-Calf USA should recognize that the Biden administration is no friend of animal farming. The extreme environmental and Net Zero policies that have taken hold in the West are declaring war on everything from sheep and cattle to fossil fuels. If the Net Zero extremists get their way, they will cull all sheep and cattle to achieve their unobtainable targets.

The Biden administration is now attacking agriculture in this new green war, following the examples of the Netherlands and Belgium. Biden’s Special Envoy for Climate, John Kerry, said concerning Net Zero at the U.S. Department for Agriculture, “We don’t get this job done unless agriculture is front and center as part of the solution.” The attack on emissions is taking its toll on food.

The Australian and New Zealand agricultural interests have been far more resourceful in capturing foreign markets for their sheep products. For example, lamb is a favored food product in Muslim-majority countries. Australia and New Zealand have effectively produced Halal-compliant food products in these markets. American producers could learn from this example, innovate, and compete in the international export market.

Regulations, inefficiency, and a lack of innovation and infrastructure are miring the U.S. sheep industry. Australia and New Zealand, two of our closest allies, should not be blamed for these failures, especially when we need their cooperation in national security matters relating to Chinese aggression, as exemplified in the recent AUKUS agreement.

Most importantly, the petition is correct to highlight the harmful effects of inflation on the U.S. sheep industry and the increased price of American sheep products. But blame for that should be leveled squarely at the Biden administration’s reckless overspending that has caused the inflation and the complacency of the Federal Reserve Board of Governors Chairman Jerome Powell, who declared that inflation was transitory. 

Inflation hit a forty-year high in 2022, affecting all businesses and shoppers. The production-cost spikes, including nearly a 23 percent increase in fuel costs and a 13.5 percent increase in feed costs during 2021, have burdened sheep producers with mounting expenses. You can’t blame Australia and New Zealand for that, but you should blame Joe Biden.

Merchants always incentivize blocking competition to keep prices high and stifle innovation, but Congress should not fall for this petition. In these inflationary times, Americans need low-cost meat. Both trade policy and regulatory changes can help them get it.

Andrew Hale is the Jay Van Andel Senior Trade Policy Analyst at the Heritage Foundation.

Image: Shutterstock.

Ever since December 2, 1823, the United States has been committed to the independence of Latin America. While the precise interpretation of the Monroe Doctrine and its implications have varied over the past 200 years, the core interests of the United States have not. South and Central America is one of the few areas that could actually threaten the U.S. heartland, and American statesmen have long recognized this fact.

However, this recognition has been lost on recent administrations. A mix of regional populism and sheer American ineptitude allows American adversaries to gain footholds that could quickly turn into regional power. 

While much attention has been paid to Wagner mercenaries in Haiti, offering a coherent security force in a nation without a functioning government, the Chinese Communist Party (CCP) has leveraged its economic might to gain valuable influence in the region. China’s use of its credit to entice vulnerable countries into Faustian bargains with the CCP is nothing new. Since launching the Belt and Road Initiative (BRI) 10 years ago, China has used its economic investment capabilities to further its strategic interests across Africa and Asia. This “debt-trap diplomacy” has come at a severe cost for several of China’s partners, with Sri Lanka being the most notable and tragic example. What is new is the extension of these lines of credit to the Western hemisphere and the deafening lack of a serious response from Washington. Historically, any intrusion into the region by any great power would have elicited swift action under the Monroe Doctrine.

Now, it is important to note significant differences between the current moment and the close of World War II, the last time the United States found itself as a power center in a multipolar world. Back then, most third parties were either poor or in ruins. Lines of demarcation were quickly drawn. This time, the emergence of multiple power centers across the globe has been gradual. As such, it is only reasonable for nations to seek a policy of strategic nonalignment to extract as many benefits as possible through cooperation with other powers. Jorge Heine of Boston University’s Active Nonalignment outline is perhaps the most noted example of this in Latin America. At the same time, Modi’s noncommittal stances in India over the past year show the potential value of maintaining strategic autonomy in this new environment.

It is striking that instead of playing all sides off each other for concessions, most Latin American nations are only ever offered deals from one side, and it’s not the democratic West. Latin America is desperate for investment, and many nations prefer alignment with the United States, but their pleas too often fall on deaf ears in Washington. Uruguay has been begging for a free trade deal with the United States for more than a decade. Still, the isolationist and anti-free trade sentiment currently in fashion in both the Democratic and Republican parties means few are enthusiastic about a trade deal with a “low-priority” country in South America. The lack of progress toward an agreement has left Uruguay with no option other than Beijing.

What’s more infuriating is the case of Ecuador. Due to the previous administration's irresponsible spending policies, the country was crippled by its obligations to repay Chinese debt. What’s worse, much of the loans were required to be paid back in long-term oil contracts, preventing the country from benefiting from the global spike in oil prices after Russia’s 2022 invasion of Ukraine and the sanctions that followed. Ecuador sold its oil to China at a discount. With his back against a wall, President Guillermo Lasso reached a deal restructuring the country’s $6.5 billion debt last year. However, as that country's political instability worsens, its economic dependence on China will only increase in the coming years.

Moreover, Chinese investment is often incredibly destabilizing for nations that receive loans. Beijing has a history of offering money without any conditions regarding how it is spent. Such negligence opens the door to elite capture, exacerbating corruption and weakening the rule of law, ultimately rolling back democratic institutions and sliding the region towards autocracy. Additionally, most Latin American nations have little experience with these types of deals, only strengthening Beijing’s hand in negotiations.

Ultimately, the best tool the United States has is trade. Its greatest asset is its economic might, the depth of its capital markets, and its ability to borrow and lend at rates unreachable by other nations. Increased trade between the United States, U.S. allies, and Latin America increases the region’s ties to the United States and reduces its dependence on Chinese credit.

Too often, American politicians and intellectuals, in deriding free trade dogmatism, have retreated to a quasi-mercantilist stance. On one level, post-liberals have an ounce of truth in their grievance. At the same time, the basic math behind Ricardian equivalence remains true, the potentially severe social and political repercussions of such policies require proactive management. The North American Free Trade Agreement (NAFTA) made all parties wealthier and more economically integrated. It also had the unfortunate side-effect of wiping out Mexico’s agriculture industry and U.S. manufacturing in the upper Midwest. The long-term effects of these developments are still felt across North America. What is needed is a proper understanding of the level of trade necessary for our current situation—a level above autarchy and below free trade dogmatism. On a concrete level, that means a large number of narrow trade deals targeting specific industries. 

The Development Finance Corporation (DFC) has also found balancing developmental assistance with foreign policy objectives challenging. Additionally, it has a distinct “America First” economic orientation, meaning that its investment in developing nations is intended to benefit American firms. The problem with this approach is that the United States is not the best source of the kind of investment that these countries need most. For instance, the United States hasn’t built a new deep-water port in decades, so the goal of U.S. policymakers needs to be connecting Latin American nations with firms from friendly countries that are not beholden to the CCP and can best meet their development needs. 

On a practical level, this means identifying nations that are receptive to U.S. interests and investment and focusing on turning them into regional leaders as well as U.S. allies. The Dominican Republic, Paraguay, Chile, and Guatemala are all potential candidates. Once identified nations show progress towards stability and prosperity, it will entice other countries towards a similar course of action.

What is perhaps most important for American diplomats to do is avoid making our Latin American policy a strictly anti-China strategy. Latin American leaders aren’t stupid, and they don’t enjoy seeing themselves as being used as chess pieces in a “New Great Game.” Instead, America should approach investment deals as primarily profit-seeking enterprises or on humanitarian grounds, not as geopolitical moves. Anti-American fears are an easy specter for populist Latin American leaders to invoke when politically convenient. U.S. policymakers need to be aware of these tendencies so as not to exacerbate them.

Additionally, the potential of sending migrants to the southern U.S. border severely limits American maneuverability in Central America. Any interference in El Salvador, Honduras, and Guatemala, the so-called Northern Triangle, could trigger ever larger exoduses of migrants, something those nations’ leaders have been quick to capitalize on. 

The Plan Colombia initiative (2000–2015) was a major triumph of diplomacy, in which American intelligence and coordination successfully broke up the Marxist FARC rebels and increased control of the legitimate government of Bogotá over the countryside. Such a plan should serve as a blueprint for further action in fragile regimes. At a time when major U.S. presidential candidates are calling for military action against the cartels in northern Mexico, such a move would be a much narrower and more prudent alternative. The Merida Initiative (2007–2021) was supposed to act as just that. Still, it was never managed well, and its replacement, the Bicentennial Framework, is too focused on social programs to achieve American strategic objectives. A focused, well-planned initiative with an emphasis on security needs to be a priority of American foreign policy, with a stick-and-carrot approach to bring a reluctant Mexican government on board.

Finally, the United States should look for easy psychological victories demonstrating its commitment to Latin America. “Illegal, Unregulated, and Unrestricted” (IUU) fishing is an excellent place to start. Such practices have devastated the environment, with fishing populations stripped bare and whole ecosystems irreparably harmed. When an armada of Chinese fishing vessels appeared off the Galapagos Islands in 2020, Ecuador begged for international assistance. A show of American force, as little as a few frigates dispatched to the region to disperse the illegal fishing fleet, would have sent a clear message. Better yet, a joint action by the Organization of American States (OAS) spearheaded by the United States and regional navies would have shown solidarity in an area where China was clearly in the wrong.

If the United States does not wish to cede any more ground in a region vital to its interests, it must rethink its regional policies. Washington needs to demonstrate a credible commitment to the area in such ways that increase Western economic interdependence, don’t ferment populist sentiment, and prevent further CCP intrusion. It’s a tall order, but one for which the United States must rise to the occasion.

Haydon N. Parham works in mortgage finance. He was a Spring 2023 New Whiggery Fellow at the Institute on Religion and Democracy and a 2024 Public Policy Fellow at the Fund for American Studies. His interests include Philosophy, Economics, and History, and he lives in Washington, DC.

Image: Shutterstock

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