meta What Does TPP Potentially Have in Store for US Agriculture? | The Bullvine

What Does TPP Potentially Have in Store for US Agriculture?

Analysts Steve Meyer and Len Steiner discuss the potential impacts of the Trans-Pacific Partnership free trade agreement on farming in the US.

What will the recently signed TPP agreement mean for the US livestock industry? What will it mean for beef and pork producers and what implications does it have for packers, retailers, foodservice operators and, ultimately, the US consumers? They are good questions and it is unlikely we will have a complete answer for them in the near future.

We have yet to see the full text of the agreement and often the devil lies in the details, especially when we are dealing with an agreement that covers 40 per cent of world GDP and one third of global trade.

One example is the impact that TPP will have on US beef and pork trade with Japan. Japan is one of the largest buyers of US pork and beef and currently the US does not have a Free Trade Agreement with Japan.

According to USDA, TPP will eliminate Japan pork duties on 65 per cent of tariff lines within 11 years (see page 3) and 80 per cent of tariff lines within 16 years. Gate price duties also are expected to decline sharply.

As USMEF notes: “Since Japan is already the largest value market for US beef and pork, even with relatively high tariffs, especially for beef, the market access details for Japan are of the most interest for the US red meat industry.”

We concur that lower tariffs in our trade with Japan would be of most benefit but what tariff lines are going to be affected? Will it be the case where the remaining 20 per cent of the lines account for the bulk of our trade? We don’t know and we will have to wait for the details to become available.

USMEF points out that “today US beef is at a significant disadvantage (in Japan) to our largest competitor, Australian beef, as the Japan-Australia Economic Partnership Agreement was implemented in January…the longer it takes to implement TPP, the longer the US will be at a disadvantage.”

Other factors play a role in terms of trade flows: available supplies and relative prices, consumer preferences, and exchange rates. Non tariff barriers such as additional testing, labelling rules, blanket disease bans, etc, also are a factor.

But the TPP should at least help bring more parity and provide for lower cost access to one of the most lucrative markets for US beef and pork.

We think the agreement will likely have only a minimal impact on US beef and pork imports. The United States imports a relatively small amount of pork, mostly from Canada and we currently have a free trade agreement with Canada.

We do import a fair amount of beef (about 3 billion pounds cwe. in 2015) but most of that product already is coming from countries with which the US already has trade agreements. Canada, Australia and Mexico accounted for about 65 per cent of US beef imports in 2015.

New Zealand would benefit from the elimination of tariffs into the US but even there the impact likely will be limited. New Zealand is a small country and thus it has a relatively low ceiling as to the amount of beef they can produce.

Already they are shipping to the US much of the lean beef product that they can. Lower tariffs will benefit their producers in lowering their overall cost but it is unlikely we will see a flood of New Zealand beef coming to the US. They are already selling half of their beef to the US.

USDA has created what we think is an excellent primer on the TPP impacts for US agriculture. It can be found at: http://www.fas.usda.gov/tpp-benefits-us-agricultural-products.

There is a lot of debate about TPP with regard to pharmaceuticals, autos and intellectual property. But for the US livestock and poultry industry it appears to us that TPP would be a good thing. Take a look at the charts.

Since 1990, US exports of beef, pork and chicken have increased 5 times while imports are up 39 per cent. The share of pork, chicken and beef exported has increased several fold as well.

USMEF put it well: “TPP should help level the market access playing field with all of our main competitor for beef…For pork it (will do) the same, especially once the EU-Japan EPA is implemented.” For US producers this should be welcome news.

Source: The Dairy Site

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