By Barbara Patterson, government relations representative, National Farmers Union

TPP CountriesEarlier today, trade ministers from each of the twelve Trans-Pacific Partnership (TPP) countries held a joint press conference in Atlanta to announce that after seven years of negotiations the group had come to an agreement. This trade agreement is a major deal that, if ratified, will set the rules of trade for decades to come.

The TPP includes 30 chapters including reduction of tariffs on goods, rules of origin, sanitary and phytosanitary (SPS) measures, investment, intellectual property, labor and environment. A summary of the agreement by the U.S. Trade Representative (USTR) is available here.

The text of the agreement is not yet available to the public, despite the near conclusion of negotiations. Many of the details of the agreement still need to be finalized by the twelve countries and the full text will likely not be available until all of the details are final. The Trade Promotion Authority (TPA) bill passed earlier this year requires USTR to make the text of the agreement available to Congress to review for 90 days. The text will also be made available to the public. NFU will release additional thoughts on TPP in the weeks to come.

National Farmers Union (NFU) has weighed in on the trade agreement and its potential impacts on family farmers and ranchers consistently over the past several years (see here, here, and here). Of major concern is the lack of agreement on rules for currency manipulation and, relatedly, the failure of USTR to include the objective of eliminating the trade deficit as one of the primary goals of the agreement. As NFU has noted several times, currency manipulation is one of the major contributors to the U.S. trade deficit.

As we await the final details of the agreement, here’s what we do know about TPP and agriculture:

  • Dairy: The negotiations on dairy were one of the final topics discussed early this morning. Complete tariff elimination on a number of dairy products was not agreed to. Canada has protected its supply management system for dairy and poultry products, but will allow for limited access to the market (3.25 percent of the Canadian dairy market and 2 percent of the poultry market). As a result, Canada will also make available $3.28 billion to dairy and poultry farmers for losses they may suffer as a result of TPP. New Zealand dairy exporters will have preferential access to new quotas in the U.S., Japan, Canada, and Mexico. Japan will gradually lower tariffs on aged cheeses over a 16 year period and will establish import quotas for processed cheese from the U.S., Australia, and New Zealand.
  • Beef: Tariffs on beef exports to TPP countries will be eliminated, excluding Japan, where tariffs will be reduced from 38.5 percent to 9 percent over 16 years. In exchange, the U.S. will eliminate tariffs on Japanese waygu beef.
  • Rice: Japan will allow for more imports of rice and will set up import quotas at 50,000 tons for the U.S. and 6,000 tons for Australia. Japan also agreed to reallocate some of its WTO import quota to medium-grain rice, which could give the U.S. more than 100,000 tons annually to export, according to reports from Politico. The quotas will expand in the 13th year of the agreement. This is substantially less than the 175,000 tons requested by the U.S. Mexico eliminated its rice tariffs.
  • Sugar: Early reports from the American Sugar Alliance suggest that the agreement will not undercut the U.S. sugar program. The U.S. did, however, give more access to Australian sugar producers. The deal will allow Australia to ship an additional 65,000 tons of sugar to the U.S. and will remove $3 million of in-quota tariffs.

The elimination or reduction of tariffs sounds like great news for farmers and ranchers, but without provisions to ensure our trading partners play fair and refrain from manipulating their currency to gain a competitive advantage over the U.S, these promises of expanded access for farmers and ranchers may fail to materialize. Furthermore, this trade agreement is likely to increase the trade deficit, just as other trade agreements have done in the past. The U.S. trade deficit was $505 billion in 2014, a nearly three percent drag on the U.S. Gross Domestic Product (GDP). To put this in perspective, a growth rate of three percent drops the unemployment rate by a full percentage point.

NFU will continue to encourage Congress to oppose this deal. Stay updated on NFU’s trade news and action alerts by visiting our action center, and send a letter to your representatives today telling them to vote against this flawed trade deal.

 

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