Promise and Pitfalls of TPP

October 22, 2016 02:13 AM

Hot-button campaign issue stands to impact farmers and ranchers most

There’s a lot at stake for farmers and ranchers when U.S. presidential candidates toss around issues such as the proposed Trans-Pacific Partnership (TPP), the largest regional trade deal since the North American Free Trade Agreement (NAFTA), that’s up for review and approval in Congress. 

Both candidates, Republican Donald Trump and Democrat Hillary Clinton, have declared their opposition to TPP. Putting the drama and bluster of the campaign aside, each candidate has alluded to lost jobs in the U.S. manufacturing sector if it’s passed, among other, non-ag-related concerns.

But most major ag groups strongly support TPP, claiming the relaxed rules on tariffs and other import barriers will open the way to more sales of U.S. ag exports. 

For example, U.S. beef would benefit, according to the National Cattlemen’s Beef Association (NCBA), especially in Japan, its biggest export market. There, TPP would cut tariffs on U.S. beef from the current 38.5% to 9% during the next 16 years. This would give U.S. producers a fighting chance to win back the $100 million in Japan sales snatched by Australian competitors in the past year when the two countries negotiated a bilateral trade agreement, according to NCBA.

“We have a very mature market in the U.S., but 96% of the world’s population lives outside U.S. borders,” said Kevin Kester, NCBA’s policy division chair, testifying for the International Trade Commission earlier this year. 

“With a growing middle class overseas demanding a higher quality diet, we need strong trade agreements like TPP in place to level the playing field and allow us access to those consumers who are asking for our product,” said Kester, a California cattle producer.

In the case of U.S. corn, which in some TPP countries faces tariffs as high as 40%, those barriers would be cut. U.S. soybeans and soybean products, which see tariffs as high as 20% in Japan, would see a reduction in barriers, too. Japan is U.S. soybean farmers’ No. 4 export market, accounting for $1 billion a year in sales.

Not all ag groups support the proposal. Just as the agreement promises to make U.S. exports cheaper and more popular in member nations, it would obviously do the same for goods coming into the U.S. This is at the heart of much opposition to TPP—the prospect of cheaper imports squeezing out factory jobs at home.

The National Farmers Union (NFU) believes TPP would adversely impact family farms and ranch operations, which would suddenly have to compete with cheaper imports.

“This agreement has been peddled to farmers and ranchers as a potential gold mine for farm exports,” said Roger Johnson, NFU president. “But as with other trade deals, these benefits are likely to be overshadowed by increased competition from abroad, paired with an uneven playing field that will not only reduce revenues for farmers and ranchers but will also speed the loss of U.S. jobs.”

Johnson said the promise of more sales of U.S. beef in the Japanese market isn’t as simple as TPP supporters describe. “Japan included a snapback provision that will allow them to fully reinstate the current high levels of tariffs if it deems that beef imports are hurting its domestic farmers,” he said. “Japan’s protection, coupled with the very generous access the U.S. gave the rest of the world, will likely push down domestic prices.” 

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