WASHINGTON, Feb. 19, 2014 - Agriculture was optimistic when Japan entered the Trans-Pacific Partnership (TPP) trade talks, back in March 2013. The Asian country currently has some of the most restrictive tariffs in the developed world – and yet U.S. farm and food exports to Japan in fiscal 2013 totaled $12.4 billion.
“Japan’s joining the Trans-Pacific Partnership could signal the government’s reconsideration of its current economic policy,” USDA’s Foreign Agriculture Service suggests on its website.
But now, agriculture groups warn, the TPP agreement could have disastrous results for the U.S. agriculture sector.
Japan is hoping to preserve its tariffs on five of Washington negotiators’ top priorities – rice, wheat, beef and pork, dairy products and sugar. And for an agreement that is supposed to liberalize, many in those sectors believe the Japanese position is unacceptable – and untenable.
“Japan is asking the United States to do something that it has never done for a trading partner,” said Nick Giordano, vice president and counsel for international affairs for the National Pork Producers Council (NPPC). “It will set a precedent that will haunt the U.S. for 20 years and will have serious implications for other trading partners.”
It’s not, said Giordano, that complying with Japanese demands will rob U.S. of current market share. If nothing changes, and Japan’s trade policy stays relatively closed to foreign imports, the country would still be the fourth largest importer of U.S. goods.
But the proposed agreement would set a “bad precedent” for other agreements with other countries. After all, TPP is not a bilateral negotiation with Japan – it’s a multilateral one, involving the U.S., Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
In a letter to United States Trade Representative Michael Froman late last month, 38 agriculture and food groups including NPPC, the American Farm Bureau Federation, Walmart Stores Inc. and the National Corn Growers Association warned if “Japan is allowed to claim exceptions for sensitive products, other TPP partners will inevitably demand the right to do the same. This could quickly lead to the unraveling of the agreement, as other parties pull their offers on sensitive products, or their concessions on sensitive issues, off the table.”
An unsuccessful TPP would be a great disappointment to U.S. agriculture, as well as the national economy as a whole, Giordano said. According to the Congressional Research Service, two-way U.S. agricultural trade with TPP countries totaled $108 billion, 44 percent of all U.S. agricultural exports and imports. Total U.S. merchandise trade with TPP countries came to$1.5 trillion in 2012. A more liberalized Trans-Pacific trade regime would mean even more money flow between the U.S. and its participating partners.
In December, agriculture groups were so alarmed by Japan’s insistence on protecting its domestic farm industries that some threatened to oppose a final TTP. In another letter to Froman, NPPC, National Cattlemen’s Beef Association, American Meat Institute, U.S. Dairy Export Council and others asked the trade representative “to consider concluding TPP without Japan.”
For now, it appears those threats are working. Japanese negotiators, who are meeting this week in Singapore with representatives from other TTP countries, have just signaled they may be willing to drop at least some agriculture demands.
“I guess no one thinks the status quo will be maintained for all tariff lines,” said Akira Amari, Japan’s economic and fiscal policy minister.
According to Japanese news reports, the U.S. has placed particular pressure on trade liberalization for beef, pork and dairy products.
But there’s one more wrinkle before the Japanese problem for agriculture goes away: Other U.S. industries may try to save themselves by suggesting tariffs that would be advantageous to them, but less so for farmers.
The U.S. automobile industry in particular is wary of Japanese demands that America reduce its import tariffs on passenger cars and trucks.
NPPC’s Giordano said agriculture groups have reached out to allies in other sectors. “Some of them really get it, that this is bigger than agriculture,” he said. But it’s still unclear what the TPP will look like in the end.
Giordano, though, is optimistic. “There are always bumps in the road, sometimes big potholes, and you have to get out and push,” he said. “We have a path forward so that our priority needs are met.”
Students of history say there’s another reason the Obama administration will push for the best possible TPP. According to specialists at the Congressional Research Service, Obama’s signature foreign policy initiative has been a “pivot to Asia,” which suggests “the perception that the center of gravity of U.S. foreign, economic, and military policy is shifting to the Asia-Pacific region. The TPP is viewed as an important element in the U.S. ‘rebalancing’ toward Asia.”
“I think that we’re dealing with something so big in scale – I don’t think [the administration is] going to close a bad deal,” Giordano said.
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