International Trade and Agricultural Labor Markets: Discussion

The Emerson paper is a good mix of theory and empiricism. In connection with the annual certification by the Labor Department of workers from the British West Indies for harvesting sugarcane in Florida, Emerson raises the question, who would gain or lose from the termination of that program? It has long been held that the labor to perform the demanding and exhausting work of cutting sugarcane on muck soil by machete is simply not available in the United States. Emerson plays with the hypothesis that domestic labor might be found at some higher wage rate. Whether such labor is simply not available domestically, or whether some such domestic labor might be available at a higher wage rate-in either case the same conclusion follows-domestic production factors would marginally lose by being idled or forced into less profitable employment, and foreign suppliers would take up the slack so created. I shall supplement Emerson's paper by relating my own experience with the termination of the Bracero Program in the mid-sixties. For years, we had admitted Mexican seasonal agricultural labor in rather large numbers into the United States. The statutory authority under which this had been done was permitted to expire in 1965 and the admission of foreign seasonal agricultural labor was greatly curtailed. The most obvious long-term result of this policy change was that the labor, which could no longer work in the United States, but was dammed up in Mexico, exerted powerful pressures to produce at home. The availability of that labor gave a decisive stimulus to Mexican applications for agricultural development loans to international lending agencies and to our own Agency for International Development. These loan projects have increased Mexican agricultural production, both for domestic consumption and for export. And the exportation of Mexican fruits and vegetables to the United States has certainly increased by leaps and bounds. We can accept this record as proof of the strong postulate originally advanced by Mundell and quoted by Emerson, "An increase in restrictions to factor movements stimulates trade." Nevertheless, it is entirely conceivable that a government may restrict the entry of labor as well as commodities. In most years, well over half of the cash receipts of American farmers comes from the sale of livestock and livestock products and less than one-half from the sale of crops. By contrast, about 90% of our agricultural exports are crops and crop products and only about 10% are livestock and livestock products. As Blandford and Boisvert argue, crop products, as distinguished from crops, are processed and raise the share of processed products to 28% of total agricultural exports. However, given the different composition of total U.S. farm production, it is not surprising that efforts are made to increase the processed component among American agricultural exports. Moreover, our nonagricultural exports are mostly made up of processed products and, finally, our mercantilist orientation as well as our negative trade balance lead us all in the same direction. According to the authors, in each of the years 1973-78, 72% of the total value of agricultural exports was made up of primary products and 28% by processed products. I cannot replicate this finding. They worked with export values which they had deflated by the U.S. wholesale price index to 1972 constant dollars. Their deflation should not