WASHINGTON, Sept. 7, 2016 - As November elections loom along with the ensuing lame duck session of Congress, farm groups are starting to assess just how bad it would be if Congress fails to ratify the Trans-Pacific Partnership.
The calculations no longer just take into account the loss of benefits from increased exports – although that’s still on the minds of many – but also the damage that will be done by setting back international trade relations and the integrity of the U.S. on the global stage.
“Rejecting TPP would undermine U.S. leadership, not only in the Asia-Pacific region, but around the world,” U.S. Trade Representative Michael Froman said in a recent speech at the Cato Institute. “Our allies couldn't help but question whether we had the will to make good on our commitments.”
Agriculture leaders say the sector would face lasting damage.
It won’t be just the loss of a step forward, it’ll be like two steps back, said Robert Guenther, senior vice president of public policy for the United Fresh Produce Association.
Deals like the TPP are extremely important to U.S. fruit and vegetable exporters because they offer a rare opportunity to put in place rules that prevent sanitary and phytosanitary trade barriers not based in science, Guenther said. And a failure on TPP could make it even harder in the future to get similar deals with other countries.
“What do our other trading partners think about something like this if we can’t get it done?” he asked.
Barry Bedwell, former president of the California Fresh Fruit Association, agreed. “There will be a lasting cost for saying no to TPP,” he predicts
It may not be possible to quantify that cost, but it will be steep, said Jason Hafemeister, associate administrator for USDA’s Foreign Agricultural Service.
“Not only will we lose the opportunities with Japan, Vietnam, Malaysia and other TPP countries, but we will fall behind in those markets,” Hafemeister told Agri-Pulse. “We will see our share decline.”
The 12 Pacific Rim nations in the TPP agreement are the U.S., Japan, Mexico, Canada, Australia, Vietnam, Brunei, Chile, New Zealand, Peru, Singapore and Malaysia.
For beef, a failure to ratify TPP would set back trade negotiations for years and hand over a bigger and bigger slice of Japan’s market to Australia, said Chase Adams, communications director for the National Cattlemen’s Beef Association.
“TPP is the conclusion of many years of negotiating,” he said. “To have to start over from scratch and come to any kind of agreement on beef that is as advantageous as what we have in TPP is not a reasonable option.”
The U.S. sells about $1 billion of beef per year to Japan, but steep tariffs on fresh and frozen cuts are holding exports back and giving a significant trade edge to Australia, which has a bilateral agreement with the Asian importer. The TPP would cut tariffs on U.S. beef to just 9 percent over 16 years, from the current 38.5 percent, according to an analysis by the U.S. International Trade Commission.
“Right now we estimate … $400,000 a day in losses,” Adams said. “That is real money and that will only continue until we are on a level playing field with Australia.”
Still, Adams stressed that it would be impossible to put a dollar amount on the damage to the standing of the U.S. and the country’s leadership in the Pacific is TPP is allowed to fail.
“China is actively pursuing their own agreement in the region,” he said. “Failure on our end would virtually assure success on their end. The U.S. needs to lead trade in the Pacific and pass this agreement.”
If that doesn’t happen, Hafemeister said, the U.S. will lose standing not just in the TPP countries, but in nations around the world that are looking to forge new trade agreements.
“What other country is going to want to negotiate with us if we turn down this very advantageous deal?” he said. “Why is China ever going to come to us the next time they want to do a trade agreement? How do we quantify that? It’s hard to say, but it’s a real factor.”
But with constant criticism of TPP on the campaign trail coming from both Donald Trump and Hillary Clinton, Congress seems less and less likely to vote on the trade deal that the American Farm Bureau Federation estimates would increase farm income annually by $4.4 billion.
Both Senate Majority Leader Mitch McConnell and Speaker of the House Paul Ryan have said a TPP vote this year is not likely, but the Obama administration continues to be optimistic. USDA and USTR representatives continue to crisscross the country, speaking about the benefits of TPP.
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