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How TPP impacts agriculture

How TPP impacts agriculture

Agricultural industry reserves judgment for major trade deal until more details are known.

I have been covering trade for over a decade, writing countless articles on multilateral trade agreements. In recent years hopes of concluding Trans-Pacific Partnership (TPP) were beginning to seem dim, comparable to the boy who cried wolf that a deal was near with every meeting.

I mean after all we’ve been entrenched to believe no major multilateral trade talks could succeed if you looked at the World Trade Organization’s track record.

President Barack Obama and Agriculture Secretary Tom Vilsack listen to reporters’ questions at a roundtable discussion with agriculture and business leaders regarding the Trans-Pacific Partnership (TPP) at the U.S. Department of Agriculture (USDA) in Washington, D. C. on Tuesday, Oct. 6, 2015.

But then on the morning of Oct. 5, trade ministers from the 12 countries did the impossible and garnered a deal that the trade ministers could come behind. Everybody had done their give and take and the result was what they had hoped would be a package that does the right balancing act for all that are in involved.

Now keep in mind, this is far from being a done deal. Final details are being prepared but the process moving forward will be for agricultural groups to look at whether the agreement is something that provides enough benefits as a whole to lobby Congress for approval. It will be 30 days before final text is made public, 60 days for the text to be available for public viewing and then the President and Congress have 90 days to ratify the agreement once it is submitted.

The President traveled to the U.S. Department of Agriculture Tuesday where he joined Secretary of Agriculture Tom Vilsack for a meeting with agriculture and business leaders on the benefits of the TPP for American business and workers.

The U.S. Trade Representative’s office said the agreement would eliminate or significantly reduce tariffs on U.S. products and deter non-science based sanitary and phytosanitary barriers that have put American agriculture at a disadvantage in TPP countries in the past.

President Obama said with this trade agreement, which spans nearly 40% of the global economy, will enable the sale of more products for agriculture. Currently over 18,000 taxes and tariffs are placed on America’s products in other countries. “Under this agreement, all those foreign taxes will fall,” Obama claimed. “Most of them will fall to zero.”

U.S. exports of agricultural products to the 11 other TPP countries totaled $63 billion in 2014, 42% of total U.S. agricultural exports.

Vilsack said without question, “agriculture is going to be a winner with TPP.” Overall it is estimated that total U.S. exports could increase by $130 billion and “if that’s true and agriculture takes its historic share of 9% of total exports that is billions of dollars of additional opportunity.”

Sector impact

For example, TPP will eliminate import taxes as high as 40% on U.S. poultry products, 35% on soybeans, and 40% on fruit exports. USDA has done an excellent job of compiling commodity benefits at www.fas.usda.gov/tpp-benefits-us-agricultural-products. For state-by-state benefits, visit www.fas.usda.gov/tpp-benefits-us-states.

Although details of the final deal have not been released, agricultural groups are reserving judgment until the text can be viewed. The National Cattlemen’s Beef Association, National Pork Producers Council and National Chicken Council remained optimistic that a final deal would benefit their sectors.

The American Soybean Association said in their statement, “From the statements made by our negotiators, it appears that the agreement will eliminate tariffs and other market access barriers in most markets, and substantially increase access in remaining markets. We are optimistic that soybeans, soybean products, and the livestock products produced by our customers all will fare well in the TPP agreement when specific details are revealed.”

In Japan, tariffs on soybean oil currently as high as 13.2 yen/kg are eliminated within six years. Current 42% tariffs on soybean meal eliminated immediately. Vietnam’s tariffs as high as 34% are eliminated within 11 years and in Malaysia tariffs as high as 10% will be eliminated immediately.

Many countries already allow duty-free corn exports. Vietnam’s tariffs, currently as high as 30%, are eliminated in 4-7 years. Malaysia currently has tariffs as high as 8% and they’re eliminated immediately. New Zealand will also eliminate its tariffs immediately.

Japan will set new quotas for wheat and wheat products. Tariffs for processed wheat products such as biscuits, crackers, and other bread products that are as high as 26% are eliminated in six years. Vietnam’s tariffs as high as 31% are eliminated within four years.

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