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Riding out the TPP's rollercoaster

Riding out the TPP's rollercoaster
Obama "cautiously optimistic" an agreement could be reached yet this year.

President Barack Obama says he will send the Trans-Pacific Partnership (TPP) agreement to the U.S. Congress for a vote later this year and he is “cautiously optimistic” the agreement will be considered and approved.

The deal, which encompasses 40% of the world’s economy, would be a win for U.S. farmers by reducing tariffs and, more importantly, addressing non-tariff barriers and creating a platform for other countries to join onto the modern trade agreement. The 12 TPP member countries include some of fastest growing middle classes, which will soon demand even more meat, dairy and eggs that are produced using grains.

The timeline for congressional action on TPP remains unclear. (Photo:hxdbzxy/Thinkstock)

The President’s comments are the latest on a rollercoaster of encouraging and discouraging signs for the pact’s future in the United States.

Many Congressional leaders have expressed skepticism, and political factors ahead of a U.S. presidential election and nomination of a new Supreme Court justice are complicating consideration of the already-complex agreement.

Jason Hafemeister, trade policy coordinator for the Foreign Agricultural Service at USDA, says every agricultural sector benefits from bringing tariffs down and improving the competitive environment.

Many have wondered whether dairy, rice and now the pork industry will support the final deal once it comes up in Congress for a final vote. Hafemeister says much of the commodity sectors’ discussions are focused on not getting everything they wanted in terms of the negotiations. The dairy industry, for example, wanted full access to Canada and Mexico, and only received partial liberalization.

Hafemeister notes that in the end the groups will need to realize that the deal is better than the status quo. He is “highly confident” that when the vote comes up on Capitol Hill those groups will “advocate on their interests, not on their emotions, and that they’ll be supportive of this.”

He adds, “trade votes are tough and we don’t have a lot of margin on these.”


Craig Thorn, partner at DTB Associates, warns there would be consequences beyond just missing out on increased trade if the U.S. doesn’t ratify TPP.

“If we turned down TPP, no one is going to negotiate with us,” he says. “Not only will we lose out on economic opportunities during that period when it is sitting on the shelf, our trade policy stays stagnated.”

Many agriculture and business groups continue to push for the measure to be approved quickly so their members can begin reaping benefits.

The American Farm Bureau Federation made TPP a priority for its massive farmer fly-in to Capitol Hill held last month, releasing a study in conjunction with the event that showed the pact could boost annual net farm income in the United States by $4.4 billion.

TPP was also front-and-center at the Commodity Classic, which brings together the nation’s grower associations for corn, sorghum, soybean and wheat as well as sister organizations like the U.S. Grains Council.

“While the timeline for TPP ratification within the United States still remains unclear, the Farm Bureau study is another sign of the benefits it would offer for farmers and agribusinesses, including our members,” says USGC chairman Alan Tiemann, who farms in Nebraska. “As the most competitive producer of coarse grains, the best strategy that the U.S. industry can have is to remove market barriers and increase access to both new and existing customers. When that happens, through TPP or other trade agreements, the economics of U.S. production are so compelling that U.S. farmers win sales. TPP will clear the road for sales and for future market development that the Council specializes in.”

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