Playing by the rules

Posted June 13, 2013 at 10:56 am

by Blake Hurst

The Defense Science Board reported last week that Chinese hackers have gained access to designs for the “advanced Patriot missile system, the Navy’s Aegis ballistic missile defense, the F/A-18 fighter jet, the V-22 Osprey, the Black Hawk helicopter and the F-35 Joint Strike Fighter…”

We also learned last week about the sale of Smithfield Foods, the nation’s largest pork processor, to a Chinese firm. The two news items are presumably not related; it’s hard to see how access to the latest pork rations will improve China’s geopolitical position. Chinese pork consumption is exploding, and even though China is the world’s leading producer of pork, it isn’t enough. United States exports of pork to China are growing.

Many questions are being raised by Missouri farmers about the transaction. Meat processing is a highly concentrated industry, with only a few companies buying the majority of meat produced on America’s farms. Farmers are concerned the purchase will lead to increased concentration in what is now a worldwide market for meat, leading to less competition for the livestock Missouri farmers grow. Missouri has restrictions on the foreign ownership of farmland, and Smithfield is a large landowner in Missouri. The sale will have to be approved by the U.S. government, and it’s important the agencies involved keep these concerns in mind.

Having said all that, Missouri farmers benefit from trade. We’ve seen growing exports of grain and meat, and agriculture in Missouri and the U.S. is a world class industry, with little to fear from global competition. Economies work best when people are free to trade, and improved access to a billion Chinese consumers, hundreds of millions of whom are rapidly entering the middle class, will guarantee increased demand for U.S. pork. Chinese firms are willing to pay a premium for access to U.S. brands, seen worldwide as a sign of quality.

However, trade only works when people play by the rules – not only economic rules, which means that contracts are honored, people deal with each other honestly and intellectual property is respected, but also the written and unwritten codes that govern relations between nations. It’s estimated that intellectual property theft costs the U.S. economy $300 billion a year, with up to 80 percent of that theft coming from China. China’s economy is rapidly developing, but the country’s attention to the rule of law, respect for the environment and the attention to safety that we expect from our trading partners are sorely lacking.

In the U.S., we take pride in our openness to foreign trade and investment, and globalization surely means we don’t unfairly restrain either trade or investment. It’s important we use what leverage we have to make sure China’s ethics, along with her economic performance, enter the 21st century. We ought not automatically object to foreign investment in U.S. companies, but we have every right to ask that our government carefully consider the purchase of Smithfield by a Chinese firm. China can hardly expect to be treated as a normal trading partner while at the same time refusing to play by the rules.

(Blake Hurst, of Westboro, Mo., is the president of Missouri Farm Bureau, the state’s largest farm organization.)