Ron Paul's Texas Straight Talk - A weekly Column

July 3, 2000

True Free Trade Benefits Texas Farmers

Tuesday evening, House lawmakers reached a compromise agreement that will permit U.S. exports of food and medicine to Cuba for the first time in nearly 40 years. This partial repeal of the trade embargo was proposed by Representative George Nethercutt of Washington State,who has joined me in working to open trade with Cuba. The agreement allows U.S. businesses to sell food or medicine to Cuba, while prohibiting the federal government from financing or otherwise subsidizing such sales. The agreement also prohibits the President from imposing further restrictions on food or medicine sales to other countries without congressional approval. I applaud this compromise as a good step in the direction of true free trade- it allows more trade, while prohibiting government subsidization of trade.
"The usual politics have accompanied the agreement. The provisions have been added and removed from two different appropriations bills. The President opposes the agreement, as it threatens his "authority" to assess trade sanctions against countries at will. Of course, he has no such authority, as the power to regulate foreign trade is expressly delegated to Congress in the Constitution. Currently, House leaders plan to take the Nethercutt agreement into conference with the Senate on an agricultural bill. My hope is that free trade principles and restrictions on unconstitutional executive orders remain intact.
"Unfortunately, as details of the final arrangement emerge, it becomes obvious that one significant hurdle remains in place. By keeping in place prohibitions on private financing, the compromise, while being a good first step, does not go far enough. Under the current agreement, farmers seeking to extend credit to Cuban buyers cannot do so through a U.S. bank. Our farmers should not have to seek financing from foreign banks. This hurdle may limit the practical benefits of the repeal of the embargo.
"Still, farmers in the 14th District would benefit from access to this new market (as well as access to four other countries named in the agreement). Trade advisory groups estimate that U.S. exports of food to Cuba alone could amount to $400 million within five years. The American Farm Bureau estimates that the aggregate market for agricultural commodities to all five countries amounts to $7 billion. Rather than punishing our farmers with sanctions, we should be eliminating barriers so that they can export agricultural products to these countries. Sanctions simply benefit our export competitors, who have increased their sales in markets closed to American businesses. Over one-third of U.S. agricultural production is exported, so farmers suffer disproportionately when trade restrictions are imposed.
"Nevertheless, the Nethercutt agreement is beneficial, but not perfect. I introduced a more comprehensive bill in March 1999 (H.R. 1181). My bill would have removed trade restrictions with Cuba completely, so that all types of U.S. products could be exported. In addition, my bill prohibited any federal assistance or taxpayer subsidies to Cuba. Also, I would allow American banks to finance sales to Cuba (or any other nation), so that Texas farmers would not have to seek financing from foreign banks. My bill would have created true free trade with Cuba, with no restrictions and no subsidies by the federal government. Still, the current agreement represents an endorsement of many of the principles contained in my bill, and I support it accordingly.
"I have always supported true free trade not simply because it makes economic sense for Texas agriculture, but also because it is a critical component of private property rights and human freedom. "Sanctions," closing foreign markets, really are penalties on Texas farmers who export much of what they produce. Such sanctions ought never be permitted merely by executive order. We have a long way to go in reforming agricultural policy and ending embargoes which hurt our farmers, but this agreement is an important first step and a victory for Texas farmers. I will continue the battle to get HR 1181 passed so that we might realize the full benefits of free trade with Cuba.