TPP text details tariff cuts, curbs on trade barriers
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WASHINGTON, Nov. 5, 2015 - The release of the Trans-Pacific Partnership text makes public for the first time details of the tariff cuts and restrictions on foreign import barriers that could benefit U.S. food and agricultural exports.
The 30 chapters of the 12-nation agreement include a section detailing its tariff cuts for beef, pork, grain and other commodities, as well as other market access provisions. That chapter includes new standards intended to facilitate trade in agricultural biotechnology.
The release of the text “confirmed a lot of positive things we had been hoping to see,” said Kent Bacus, associate director of legislative affairs for the National Cattlemen's Beef Association. Under the TPP, Japan's overall tariff on beef muscle cuts would be gradually cut from 38.5 percent to 9 percent.
The biotech provisions include a requirement that governments allow companies to apply for approval of new crop traits year around, not just during limited time periods. The agreement also would require formation of a biotech working group to help TPP countries develop policies and regulations, and the deal would establish a procedures for countries to follow in assessing the risk of a low-level finding of a unapproved product.
The provisions could be particularly helpful if additional countries such as South Korea or China join the TPP, an industry official said.
“If we had more timely, predictable approvals we wouldn't have a situation where there's approval in one country and lack of approval in another,” he said.
Almost as important to biotech companies as well as the rest of U.S. agriculture is the agreement's sanitary and phytosanitary measures (SPS) chapter, which spells out requirements intended to prevent countries from unnecessarily using food safety or animal and plant health protections to create barriers to imports.
Any SPS restrictions on imports would have to be “based on documented and objective scientific evidence that is rationally related to the measure.” And the risk assessments used to justify restrictions would have to take into account “reasonably available and relevant scientific data, including qualitative and quantitative information.”
The section also would set up procedures for regionalizing SPS measures so that restrictions would apply to a portion of a country that's infected with a pest or disease rather than the entire nation's production.
An intellectual property chapter would restrict the use of regional product names, known as “geographical indications.” The section includes guidelines for how countries would determine whether a term is generic in its market.
Text release starts clock ticking on deal
The release of the text triggered the process for congressional and ratification of the deal. Under the Trade Promotion Authority law enacted this summer, the text of a trade agreement must be released at least 60 days before President Obama can sign it. Congress will consider it later.
Separately, the White House sent a letter to Congress formally announcing the president's intent to sign the agreement.
“I know that if you take a look at what's actually in the TPP, you will see that this is, in fact, a new type of trade deal that puts American workers first,” Obama said in a blog post.
Senate Agriculture Chairman Pat Roberts, R-Kan., said his staff was going over the text “with a fine-toothed comb, and we're looking forward to seeing if we can support it.”
Included in the TPP release are a number of side letters detailing bilateral understandings between the United States, Australia, Vietnam, Mexico and other TPP countries on treating issues such as sugar, catfish and geographical indications.
Some commodity groups used the release of the text to announce endorsements of the agreement.
“The TPP tariff reductions in our key markets including Japan and Vietnam allow us to go head-to-head with our foreign competitors and successfully win the business,” said Cully Easterday, vice president of the National Potato Council.
Ron Prestage, president of the National Pork Producers Council, said the agreement would “provide benefits to our producers that dramatically exceed those of prior trade agreements. I assure you that pork producers across this great nation will do whatever it takes to get TPP passed by Congress and implemented.”
Japan won snapback provision on beef tariffs
To the National Farmers Union, the text just reinforced its opposition to the agreement.
NFU President Roger Johnson said the deal was “particularly bad for the nation's ranchers,” citing a snapback provision that Japan demanded to allow its tariffs on beef to jump to higher levels when imports exceeded rising annual levels.
The agreement also lacks provisions to prevent member nations from manipulating their currencies to make imports more expensive, he said.
NCBA's Bacus said the deal is still good for beef producers, even though tariffs would be higher on import volumes that exceed the annual limits, which start at 590,000 metric tons for muscle cuts and rise each year.
Still, officials with the U.S. Meat Export Federation cautioned that the trade pact's benefits may take time to materialize and that U.S. competitors such as Mexico and Canada will also see tariff cuts on their exports.
“We still have to work to garner our market share even though the border protection is coming down. I think that in order to dignify this agreement, the amount of work that we have to do from a marketing standpoint . . . is all very, very important,” said Philip Seng, president and CEO of the U.S. Meat Export Federation.
Sugar, rice, others still weighing deal
Representatives of some commodities, including sugar, rice and milk, withheld comment on the text, saying they needed more time to review it.
During the TPP talks, Australia had been asking for increased access to the U.S. sugar market. In side letters, the two countries agreed to consult on that possibility, but the consultations couldn't occur until nine years after the agreement takes effect.
Dalton Henry, director of policy for U.S. Wheat Associates, said the group is meeting with the National Association of Wheat Growers this week in Lake Tahoe, Nevada, where they will formulate a policy on the agreement.
He pointed to a previous statement by USW President Alan Tracy who said that TPP is “critically important” because rival exporters such as Australia are moving ahead with bilateral agreements that eliminate tariffs with countries like Vietnam.
One group that should be happy with the agreement are the producers of bourbon and Tennessee whiskey. In letters that went along with the report, Japan agreed to consider prohibiting the sale of such products if they haven't been made in America. In turn, the Obama administration agreed to consider the same protections for Japanese sake. Chile and the United States also exchanged similar letters on whiskey and certain Chilean wines.
Tequila and Mezcal are getting the same kind of treatment from the United States. In a letter to Mexico, the U.S. said it would take “due note of its obligations with regard to the recognition of Tequila and Mezcal as distinctive products of Mexico.”
(Spencer Chase and Daniel Enoch contributed to this report.)