Negotiators for the twelve countries of the Trans-Pacific Partnership (TPP) trade agreement have taken a break after meeting in Guam for almost two weeks in late May. They are awaiting the U.S. Congress passage of Trade Promotion Authority (TPA) to accept or reject a final agreement without amendments, and for Japan to make a final offer on agricultural and automobile imports. Representatives of farmers and ranchers in agricultural exporting TPP countries, the Australian National Farmers’ Federation, the American Farm Bureau Federation, the Canadian Agri-Food Trade Alliance and the Federated Farmers of New Zealand, took the opportunity in Guam to reiterate their call for “meaningful and comprehensive market access” that is extended equally to all participating countries.
The four groups said in a statement on May 19th, “However, the importance of a beneficial deal for agriculture and agri-food exporters should not be underestimated. This type of deal can only come through agreed-upon terms that liberalize trade throughout the TPP region and deliver competitive, transparent, plurilateral, non-discriminatory access.” That means that any concession one country makes to another would be offered to all TPP countries. They did not demand the immediate elimination of all tariffs and non-tariff barriers. That was a goal several years ago when the group consisted of only five countries, but became increasingly impractical when first the U.S. joined the talks and then Japan. They continued to push for the longer term elimination of all tariff and non-tariff barriers.
The groups also called for the elimination of export subsidies and other policies that distort agricultural markets. According to the publication Inside U.S. Trade, the U.S. had agreed to the ban on agricultural export subsidies if other TPP partners dropped demands for new disciplines for export credit programs. A ban on export subsidies had been tentatively agreed to in earlier WTO talks.
If all the TPP countries agree to common tariffs and the elimination of export subsidies, these would be major steps forward to more agricultural trade among the twelve countries. It would also open markets for other countries, like Korea, that has indicated an interest in joining after negotiations are completed. Conversely, it may prove to be a stumbling block for China to join.
In Guam, Canada appeared to become more engaged in talks on market access for its sensitive products, including dairy and poultry, according to a report by Inside U.S. Trade and other trading partners have become more specific in making market-opening requests to Canada. Some TPP countries had talked of excluding Canada from an agreement unless they made more ambitious market access offers on those sensitive agricultural products. Canadian agricultural exporters had been asking their government to remain part of the TPP talks and a recent analysis from the Canadian Pork Council reinforced that position.
Just when negotiators will meet again is open issue, but many details are yet to be filled in. The agricultural groups have agreed to move quickly by making the best offers apply to everyone and minimizing the internal difference. As the statement said, “A comprehensive agreement would encourage regional supply chains with production and processing occurring where competitive advantages exist.” Those countries with a comparative advantage in certain agricultural products could look at the whole TPP region as a market, not just one or two countries where it had the most negotiating power or for only a few products.
Consumers of imported agricultural products will also benefit. They will have more suppliers overall and more off-season suppliers looking to fill small gaps in supply. Supply shortages caused by weather or diseases could be filled by non-traditional suppliers throughout the region. Supply chains could increasingly be built around consumption points rather than production locations. Food importing countries could choose to join the completed TPP to adopt a set of import tariffs that are already established.
Many things could still go wrong in the talks. The four groups making the statement on agricultural trade are powerful in their countries, but they are only private groups, not the governments setting policy positions. And the governments are listening to other groups, as they are supposed to do. In Canada for example, the exporters seeking an agreement are offset by dairy and poultry interests defending the status quo.
The U.S. House of Representatives has yet to announce plans to schedule a vote on the Senate-passed TPA. The lack of a scheduled vote probably means that the House Republican Leadership has yet to be assured of a majority vote for the bill. They will probably delay the vote until a ‘yes’ majority is guaranteed.
Then the Japanese take center stage. Japanese and U.S. negotiators continued to meet in Guam and have probably met since then. Japan needs an agreement to move its industrial policy forward and the four agricultural exporters need a deal with Japan on agriculture. Prime Minister Abe remains the best hope for both of those. They will not release their final offer until TPA is passed. Mr. Abe may have his deal worked out within his party or be waiting for TPA to pass to make his final push.
Once the U.S. and Japan have released their positions, the joint position of the four major TPP exporters becomes operational. Countries like Canada and the U.S. will need to work out their internal differences and present final plans.
If all countries substantially agree with the four major exporters, the agriculture portion of the trade agreement could be worked out fairly quickly. If not, an agreement could take a while as countries work out the issues bilaterally.
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.