Why TPP could be the biggest game in town
By Clayton Yeutter
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For America's farmers and ranchers “the biggest game in town” during 2011 may be one that many of them have not yet even heard about! The Trans Pacific Partnership (TPP) negotiations. Most new Members of Congress have probably not heard about TPP either. But they soon will, and they'll generally like what they hear.
These negotiations started out a few years back with only four countries involved - Brunei, Chile, New Zealand and Singapore. But the Pacific/Asian orientation soon began to attract attention, ‘cause that's where the growing markets are! Even the United States began to realize that these negotiations might provide more in the way of market access than the somnolent Doha Round. And the smaller number of countries sure made the negotiations much simpler to conduct.
Australia and Peru soon came on board, then the U.S., and more recently Vietnam and Malaysia have also become participants. The present group of nine Pacific Rim countries provides an attractive mix, and a regional free trade agreement covering all of them would be an impressive achievement. But - the U.S. already has free trade agreements with Singapore, Australia, Peru and Chile. Those agreements are not likely to change much, if at all, in these negotiations. And American agriculture isn't likely to export much to either Brunei or New Zealand. That leaves Vietnam and Malaysia as having the most market potential. Yet market access opportunities there, though significant, are not likely to sell a lot more tractors in Nebraska!
So what are we missing? What could happen, and should happen, in TPP that would excite U.S. farmers and ranchers? The answer: adding Japan!
In the context of the agricultural negotiations, Japan is the 600 pound gorilla that would be a welcome guest. For many years Japan trailed only Mexico as a market for U.S. agricultural products. Though China has now moved into second place Japan is still an extremely valuable market for us, and one that has a lot of room to grow. TPP provides an immediate, unique opportunity to unleash that growth potential.
Why isn't Japan already a participant? It hasn't been invited, and it hasn't yet asked to be invited. Japan is now engaged in consultations with the other nine countries, and has just had a delegation here in Washington, D.C. for that purpose. The Kan government would unquestionably like to join TPP, though it is experiencing a strong pullback from its own highly protectionist, uncompetitive agricultural industry. That's not a surprise, but one can only hope that good sense will prevail and Japan will use the benefits of TPP as a rationale for commencing long overdue reforms of its agricultural industry.
The Obama Administration recognizes the appeal of having Japan join TPP, for this would make the negotiations far more meaningful to both American industry and to U.S. agriculture. But the Administration is somewhat hesitant, because adding Japan would lengthen the negotiating process. The U.S. hosts a major Asia/Pacific (APEC) meeting in Hawaii in November and the Administration would like then to announce the successful conclusion of TPP. Were Japan to become a TPP participant the negotiations are likely to extend past November.
But would the Administration really like to claim TPP as a big success were it to add little to our exports, or to anybody else's exports for that matter? That's nothing to write home about! One can fully understand why no one wishes TPP to “spin its wheels” for eight years, as has the Doha Round. But negotiating an agreement among 10 countries (in TPP) should be a lot easier than attempting this with 150 countries (Doha). And if adding Japan extends TPP by a year or so, so be it. It'll be worth it.
We'll soon know whether Japan will be a TPP participant; we ought to welcome and encourage that development. No single decision in 2011 will have a greater impact on the financial wellbeing of several major segments of American agriculture than this one.
About the author: Ambassodor Clayton Yeutter is a Senior Advisor to the global law firm Hogan Lovells. In 1989, Yeutter was named Secretary of Agriculture where he steered the 1990 Farm Bill through Congress. The Nebraska native served as U.S. Trade Representative from 1985-88, and while there led the American team in negotiating the historic U.S.-Canada Free Trade Agreement, the precursor to the North American Free Trade Agreement. He also helped launch the most ambitious trade negotiation in history, the 100-nation Uruguay Round, which culminated in the creation of the World Trade Organization. From 1978-85 Ambassador Yeutter served as President and Chief Executive Officer of the Chicago Mercantile Exchange.
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