ITC report shows farmers reaping big gains from TPP
By Bill Tomson
© Copyright Agri-Pulse Communications, Inc.
WASHINGTON, May 18, 2016 - The Trans-Pacific Partnership would reduce the U.S. trade deficit and increase jobs throughout the country, but some of the biggest gains would be for the agriculture sector, according to a U.S. International Trade Commission report released Wednesday evening.
The report concludes that if the TPP were implemented agricultural exports would rise by about $7.2 billion per year by 2032. Imports of farm products would also increase, but only by $2.7 billion annually.
Congressional leaders remain pessimistic that the trade pact will get a vote this year. But both U.S. Trade Representative Michael Froman and American Farm Bureau Federation President Zippy Duvall lauded the ITC conclusions as yet more proof that Congress should approve the 12-nation trade agreement among the U.S., Japan, Mexico, Canada, Australia, Vietnam, Brunei, Chile, New Zealand, Peru, Singapore and Malaysia.
“We look at this as a competitive issue,” Duvall said in a joint conference call with Froman. “It is very difficult for us to find new markets and broaden our markets here in America and the only way to expand our markets is to do it overseas and this is a great opportunity for us to go into the Pacific Rim and be able to compete and be able to spread our market out and sell some of our products there.”
But the bottom line, Duvall said, is that the ITC report shows farm income increasing substantially because of TPP.
“We need this to happen now because American agriculture is in a very bad economy right now and this is one thing that Congress could do immediately to give (farmers) some relief in rural America …” Duvall said.
House Ways and Means Committee Chairman Kevin Brady, R-Texas, noted the positive conclusions of the ITC report, but stressed that lawmakers still have unanswered questions about TPP and he made no predictions about when the pact could come up for a vote or if it would be approved.
“Again, it's the substance of TPP that will drive the timing and process in Congress, not the other way around,” Brady said in a statement. “We cannot move forward until the administration has addressed member concerns on key aspects of the agreement, including by developing implementation plans on key obligations in the agreement to ensure that our trading partners will comply and TPP will deliver significant benefits across our country.”
USTR officials are working now to get assurances from other TPP countries that they are moving towards implementing provisions of the pact and also relaying those assurances to members of Congress.
“This is an ongoing process … and usually it's done after Congress approves an agreement, but in this case we wanted to get an early start on it and so we have been working with our trading partners,” Froman said. “We're having a good dialogue with them so that we can give that kind of reassurance to members of Congress and stakeholders who are properly focused on the full implementation of the agreement.”
The benefits from what those countries have agreed to are substantial, according to the ITC report. The commission calculates export increases for most agricultural goods with dairy and meat being the biggest winners.
Right now Australian beef exporters have a major edge over the U.S. when it comes to selling beef to Japan thanks to the Japan-Australia Economic Partnership Agreement, but TPP would level that playing field.
“Japan is currently the largest export market for U.S. beef, and Japan's 38.5 percent tariffs on fresh and frozen beef cuts would be reduced to 9 percent over 16 years,” according to the ITC.
Overall, U.S. beef exports would increase by $876 million per year after 15 years, while imports would increase by just $419 million annually, the report concluded. Nearly all of the increased beef sales - about $840 million - would be created by increased access to Japan's market.
The TPP would give dairy an even bigger boost. The ITC report shows dairy exports rising by $1.8 billion per year by 2032. Most of that increase - about $1.2 billion - would result from more sales to Canada. Falling in a distant second would be an increase of $534 million of dairy per year to Japan.
Overall imports would rise by just $349 million, which would come from Canada and New Zealand.
One sector that would see declines in exports due to TPP enactment would be grains. Exports of wheat, rice and grain would all drop due to the trade agreement, the ITC report said.
But in the case of corn, the Farm Bureau's Duvall said the farmers still come out on top. While exports would sink, more of the grain would be used domestically to feed the livestock that will end up providing more meat for exports to countries like Japan and Vietnam.
And the ITC calculations bear that out. The report shows corn exports falling by about $31 million per year by 2032, while U.S. farmers are selling an additional $207 million worth of the grain annually.
USDA Secretary Tom Vilsack, who has been one of the TPP's strongest advocates, said Wednesday that the ITC report is more evidence that Congress needs to pass the trade pact this year.
"Today's ITC report echoes what every major reputable study on TPP has now found, from the Petersen Institute to the American Farm Bureau Foundation, which is that TPP will provide strong benefits for the U.S. agriculture sector, with agricultural output set to be $10 billion higher per year by 2032 than it would without the agreement,” Vilsack said in a statement. “If we don't act, not only will we lose these opportunities, we will be ceding our leadership in the region to China, allowing them to define the rules that the Pacific Rim plays by. We can't afford to delay passage; there is simply too much at stake."