Chief negotiators for the 12 countries working on the Trans-Pacific Partnership (TPP) free trade agreement (FTA) will meet again on April 23-26 near Washington, DC in preparation for a ministerial meeting in late May to conclude the agreement. While most of the attention in the U.S. and other countries is on the politics of an agreement, a Congressional Research Service analysis in March The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress reported that key decisions for agriculture are yet to be made.
The TPP FTA is envisioned as a comprehensive and high-standards agreement that will liberalize trade in nearly all goods and services with commitments beyond those for the WTO. The U.S. is negotiating market access for goods, services, and agriculture with individual countries without U.S. FTAs: Brunei, Japan, Malaysia, New Zealand, and Vietnam. Market access issues for U.S. agricultural products with Japan are defining whether the final agreement is in fact a high-standards trade agreement for the 21st century. While the focus has been on Japan, Vietnam and Malaysia are also considered to be commercially significant markets. The countries have exchanged offers with each other and then responded with requests to improve the offers.
Japan is the fourth largest market for U.S. agricultural exports and the most promising market within the TPP group. Japan uses high tariffs and restrictive quotas to protect Japanese producers of pork, beef, rice, wheat, barley, dairy products, and sugar. Although Japan’s market access offers have not been made public, there have been unofficial indications that Japan has recently improved its access offers on the most politically critical commodities, suggesting a narrowing of differences.
For those countries with existing FTAs, the U.S. position is that it will not engage in talks to reopen any existing market access provision, except for Canada where access for U.S. products to the Canadian markets for dairy, poultry and eggs were left out of NAFTA. After a U.S.-Japanese agreement is reached, the market access issues with Canada are expected to be addressed. The authors are uncertain what Canada may request in access to the U.S. market. Completing all this work by the end of May could be hard to achieve.
Dairy and sugar are sensitive issues for the U.S., but for different reasons. The dairy industry seeks major market access from Japan and Canada and net trade benefits overall for the industry. U.S. sugar producers are opposed to any additional imports from the TPP region, while sugar users want additional immediate access and long-term market opening efforts. Australia, a major sugar producer, may seek additional access to the U.S. sugar market in return for considerations on non-agricultural issues.
U.S. agriculture also has a critical interest in several other chapters of the agreement, with the sanitary and phytosanitary (SPS) chapter being the most important. The SPS chapter addresses commitments on human health and animal/plant safety which go beyond the WTO SPS Agreement. U.S. agricultural groups supported the inclusion of an enforcement mechanism; other agricultural exporting countries appear to also favor a dispute settlement process. The U.S. Trade Representative’s proposed text would establish a consultative mechanism among technical experts to address SPS disputes and a rapid-response mechanism to quickly resolve SPS barriers for perishable products. The authors are unclear on what type of dispute settlement mechanism would be acceptable and which SPS obligations the U.S. would agree to resolve under the process.
The geographical indications (GI) issue raised by the EU has spilled over into the TPP FTA talks because several countries have bilateral FTAs with the EU. The
U.S. dairy industry is concerned that the EU protection provided to what U.S. manufactures consider common cheese names could impede their access to export markets. How this will be resolved is an open question according to the authors.
Australia has had a negotiating objective to impose disciplines on other countries’ use of export subsidies, official export credits, and food aid. The U.S. has eliminated the use of export subsidies and significantly reformed its use of export credit guarantees, but is opposed to including food aid disciplines in the TPP, leaving that to other multilateral talks. Some sources suggest that Australia’s insistence on including these issues is a strategy to work a compromise which would include the U.S. addressing Australia’s other priorities, including sugar and dairy access to the U.S. markets.
None of this unfinished business is an indication that U.S. agricultural interests have not been adequately addressed or that U.S. agriculture should walk away. Negotiating the 30 chapters in the text has been a monumental, five-year undertaking. Nine chapters are considered closed. Everybody did not get what they wanted, but they could all live with what they got. The negotiators have shown they can make trade-offs to conclude a deal.
The hardest issues have been left to last, as would be expected. The heaviest burdens have been place on the shoulders of the Japanese negotiators and Prime Minister Abe. But, they agreed to join agricultural talks that were going 180 degrees away from Japanese trade policies of the last 50 years. As of this writing, the principal negotiating ball continues to be in their hands.
At the chief negotiators meeting in late April, additional chapters are likely to be closed and the undecided issues further narrowed down. There are tentative plans for one more negotiators meeting before the ministerial meeting in late May. Japanese Prime Minister Abe has a previously scheduled official visit to the U.S. on April 28 with planned meetings with President Obama and a state dinner at the White House. This would be the perfect time for the two leaders to make key political bilateral trade policy decisions on the TPP FTA which would precipitate an active month of May for decisions among the 12 countries.
If the TPP FTA does substantially reduce and/or eliminate tariff and nontariff barriers to trade and investment, it could serve as a template for future trade agreements. South Korea continues to weigh being the first to ask to join after the agreement is finished. Others are expected to follow.
Ross Korves is a Trade and Economic Policy Analyst with Truth About Trade & Technology (www.truthabouttrade.org). Follow us: @TruthAboutTrade and @World_Farmers on Twitter | Truth About Trade & Technology on Facebook.