AEI Cargill CEO: Let’s collectively stand up for free trade and resist the currents of protectionism Cargill CEO Dave MacLennan spoke on March 28 at a global meeting on commodity trading in Lausanne, Switzerland, sponsored by the Financial Times of London. The title of MacLennan’s talk was “Standing Up for Trade” and he made a very refreshing case in favor of free trade and against the rising waves of protectionism and nationalism in the US. Here are some key excerpts, organized into five sections, but the entire speech of more than 2,000 words is well worth reading in its entirety (emphasis added): 1. I wanted to be here today, because we are at a turning point in our global story. As leaders in the commodities industry, it’s time for us to make a strong stand for trade. At Cargill, we
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Cargill CEO Dave MacLennan spoke on March 28 at a global meeting on commodity trading in Lausanne, Switzerland, sponsored by the Financial Times of London. The title of MacLennan’s talk was “Standing Up for Trade” and he made a very refreshing case in favor of free trade and against the rising waves of protectionism and nationalism in the US. Here are some key excerpts, organized into five sections, but the entire speech of more than 2,000 words is well worth reading in its entirety (emphasis added):
1. I wanted to be here today, because we are at a turning point in our global story. As leaders in the commodities industry, it’s time for us to make a strong stand for trade. At Cargill, we believe responsible trade keeps our food system connected. Every day, 150,000 Cargill employees in 70 countries are working to nourish the world in a safe, responsible and sustainable way. For more than 150 years, we have partnered with small- and large-scale farmers to move food around the world to where it’s needed most. Our reach helps us drive the benefits of global trade down the supply chain—into rural communities around the world. That wider world is critically important.
- Trade provides nations access to critical commodities, services and capital.
- World trade increased more than 150% between 2000 and 2014 – increasing from $4.8 trillion to $12.2 trillion.
- We are a U.S.-based company, but we know that one-third of U.S. farmland is planted for exports; exports that nourish people in other parts of the world.
We understand all of our economic and political fates are inextricably linked. The success of our companies, our employees and the wider world depends on us making a strong, collective stand for trade.
2. We know trade is imperfect and that its benefits are not always evenly distributed. Some people feel that trade is making their lives worse, not better, by contributing to job loss and social inequality. In the last decade, 88 percent of U.S. job losses in manufacturing were attributed to an increase in productivity driven by better information technology, robotics and organization. That’s a harsh reality to face for workers and their families.
But our economy is growing and over the next decade, it’s estimated that nearly three and a half million manufacturing jobs will be needed, and two million are expected to go unfilled due to a widening skills gap. The challenge is that the jobs of today will not be the jobs of tomorrow. That has been consistent throughout history. We need to immediately address this skills gap. As companies, we can make sound investments in our future workforce, but public policy and the education system need to keep pace. We all have a role in filling the skills gap.
3. Trade is not the reason so many citizens face hardships around the world. But it has become a convenient excuse.
We need to do a better job of explaining trade’s benefits to the factory worker in the American Midwest as well as the European farmer. We also need to help our policymakers demonstrate that trade creates jobs and boosts economic growth. We have to help these leaders speak to their base and build a better life for their constituents. In the United States, that means making sure our leaders know that:
- Trade is a net job creator.
- Today, more than half of the U.S. manufacturing workforce depends on exports.
- And that nearly half of all exports of U.S.-manufactured goods are sold to the 20 countries that have eliminated barriers through free trade agreements.
In general, trade does create economic opportunities. It means that families in Asia will pay less at the grocery store. And it increases income and delivers a higher standard of living for farmers in Latin America.
But trade—in and of itself—cannot be the only solution to all the world’s social and economic problems. It can’t bring back businesses or jobs that were lost due to lower cost labor abroad, or because of automation, more efficient technology, changing consumer preferences or demographic shifts. The response to these difficult disruptions often comes in the form of restrictive trade policies and actions. As we know, the United States pulled out of the Trans-Pacific Partnership. Cargill hopes this is only a temporary pause in the U.S.-Asia Pacific trade relationship. Because when trade is restricted, economic engines weaken on both sides of the equation. Protections do more harm than good.
4. Each new day seems to bring news of another country leaning further toward economic nationalism. Countries turn their gaze inward and attitudes toward trade become more guarded, more self-focused and more inflexible. Such a jaundiced viewpoint eventually leads to the rejection of mutually beneficial agreements in favor of one-sided pacts.
And then, the ripple effect happens—as country after country retaliates with similar measures. This damages economies as they attempt to rely on trade restrictions to support or revive industries that are struggling to remain competitive. The result? The world of trade is tied in knots.
5. So what is the path forward and how can we stay connected? This is not just another rhetorical question. The success of our companies—and the success of our customers, our workers and our communities—hinges on how we respond.
To realize the full benefits of the global economy, this is what Cargill is prepared to do:
We will advocate for comprehensive trade agreements like NAFTA, TPP and others. Today, one in every 10 acres on American farms is planted to support exports to Canada and Mexico. We have seen U.S. agricultural exports to both countries grow from nearly $9 billion when NAFTA was signed in the 90s to nearly $39 billion USD in 2015. Food and agricultural production and exports also support more than 17 million full- and part-time jobs in the agricultural sector, employing workers from coast to coast.
It’s our shared responsibility to collectively stand up for trade because it’s good for people and communities. Trade facilitates prosperity and peace by helping us connect and share talent, ideas and markets. Let’s stay globally connected and resist the currents of protectionism. Let’s address the gaps and take tangible steps to build a more profitable, peaceful and connected world.
MP: What a powerful and eloquent statement in defense of free trade, and especially refreshing coming from a US CEO.
(HT: Dennis Gartman, in today’s The Gartman Letter)