Groups React to TPP Deal

President Obama Meeting With Ag Leaders Tuesday at USDA

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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The Trans-Pacific Partnership trade talks were successfully concluded early Monday morning. The deal includes the countries of U.S., Japan, Australia, Canada, Mexico, Vietnam, Malaysia, Singapore, Brunei, New Zealand, Chile and Peru.

OMAHA (DTN) -- Initial reaction to a Trans-Pacific Partnership deal was varied Monday as some agricultural groups acknowledged they need more details on the final pact while others already had their minds made up on whether they back TPP or oppose it.

The agreement between the U.S. and 11 other Pacific-rim countries was announced Monday after marathon talks over the weekend in Atlanta.

Reflecting the importance the White House sees in getting agriculture on its side in the TPP debate, President Barack Obama will go to the U.S. Department of Agriculture on Tuesday where he will join Ag Secretary Tom Vilsack for a meeting with agriculture and business leaders. The event is specifically to pitch the benefits of the trade deal.

U.S. Trade Ambassador Michael Froman pointed out Monday the deal eliminates tariffs on more than 18,000 U.S. products. The White House added that the "key tax cuts" in the trade deal would help American farmers and ranchers expand exports. The administration added those import taxes currently can be 40% on poultry products, 35% on soybeans and 40% on fruit.

Froman pointed to the benefits of the deal for agriculture for beef, pork and dairy.

"Our dairy industry has become a more export-oriented industry in the last 10 years," Froman said. "We export about 15% of our dairy products. This will open up additional opportunities in these other countries where they face tariff or non-tariff barriers."

The countries in the partnership account for 42% of all U.S. ag exports, totaling $63 billion, Vilsack said. The agreement "provides a more level playing field in trade for American farmers," he said. Besides reducing or eliminating tariffs, TPP also will reduce the likelihood of non-scientific trade barriers among the countries. The secretary cautioned against rejecting the deal.

"Failing to grasp this opportunity would be a mistake; worse than just losing out on potential gains, our producers would fall behind other countries that are negotiating their own preferential arrangements in TPP countries," Vilsack said. "We are committed to working with Congress within the framework of the recently-passed Trade Promotion Authority to obtain a strong bipartisan understanding of and support for this historic trade deal that benefits farmers, ranchers, and all those who live, work and raise families in rural communities."

COMMODITY GROUPS REACT

U.S. Wheat Associates noted Asia is a growing regional market and the trade agreement has the potential to increase wheat demand even in countries already offering duty-free access, said Alan Tracy, president of the group. "That is critically important because our competitors like Australia are moving ahead with bilateral agreements that eliminate tariffs on wheat imports with countries like Vietnam. The high standards in the TPP agreement should help us be more competitive and hopefully lead to even more opportunity for our wheat as new countries join TPP in the future," Tracy said.

Groups such as the National Pork Producers Council and National Cattlemen's Beef Association immediately praised the deal. NPPC stated the group was confident the deal would be good for U.S. pork producers. "We look forward to reviewing the full text of the TPP agreement and the schedules of market access concessions as soon as possible," said Ron Prestage, president of the National Pork Producers Council. "We are reserving final judgment on the package until then."

The National Chicken Council also applauded the conclusion of talks and was looking forward to seeing how the deal will affect the prospects of exports to Canada. The TPP represents a significant opportunity to expand U.S. chicken exports and bring increased economic benefits to chicken farmers and companies across the country.

"Our major goals in this deal are to get a strong commitment on enforcement, in particular in the area of sanitary and phytosanitary measures," said Mike Brown, president of the National Chicken Council. "Second, we hope to see that the long-protected Canadian market is finally opened to free trade for poultry."

Chip Bowling, president of the National Corn Growers Association, stated the group was pleased an agreement has been reached and the group was looking forward to the details. "We are hopeful that this agreement continues the tradition of past free trade agreements, which have had a positive impact for America's farmers and ranchers," Bowling said. "In the coming weeks, we will carefully examine the agreement to determine whether it is in the best interests of America's corn farmers."

CURRENCY MANIPULATION

National Farmers Union, whose members have been long-time opponents of the deal, cited the lack of enforcement on currency manipulation as another strike against the trade pact. "Because of this, NFU will continue to vigorously oppose this agreement and urge Congress to reject this deal as well," said Roger Johnson, president of NFU. "Gains that may have been made in the agreement to ensure fairness and equity in trade for America's family farmers and ranchers are likely to be lost due to currency manipulation."

A more surprising statement came from Ford Motor Co., which also lashed out at negotiators for failing to address currency manipulation even though the deal is expected to lower tariffs for auto exports to Japan. Ford noted the trade-promotion bill set a clear objective of dealing with currency issues. "TPP fails to meet this test," stated Zia Ojakli, Ford's vice president for government and community relations. "To ensure the future competitiveness of American manufacturing, we recommend Congress not approve TPP in its current form, and we ask the administration to renegotiate TPP and incorporate strong and enforceable currency rules."

While the White House released a detailed fact sheet highlighting tariff reduction, labor and environmental rules, internet commerce and other provisions, the fact sheet did not address rules on currency.

SPILLED MILK

Trade negotiators acknowledged Monday that dairy access proved to be one of the last issues negotiated. New Zealand, where dairy is the country's largest export, failed to get the market access it had hoped to achieve when New Zealand took the lead to help form the TPP. Fonterra, New Zealand's major dairy cooperative, stated the group was disappointed the TPP fell short of the original goals to eliminate all tariffs.

Dairy Farmers of Canada cited that Canada essentially gave up what amounts to 3.25% of its projected 2016 milk production in the trade deal. The country already has approved a $3.29 (U.S.) billion package to help Canadian dairy farmers deal with imports over the next 15 years. Still, Canada's dairy farmers largely protected their supply-management program.

"We obviously would have preferred that no additional market access be conceded in the dairy sector," said Wally Smith, president of Dairy Farmers of Canada. "However, we recognize that our government fought hard against other countries' demands, and have lessened the burden by announcing mitigation measures and what seems to be a fair compensation package, to minimize the impact on Canadian dairy farmers and make up for cutting growth in the domestic market. We have come a long way from the threat of eliminating supply management."

TOBACCO CARVE-OUT

Health groups praised a provision that would prevent tobacco companies from suing countries over health laws meant to curb tobacco use. The groups have criticized tobacco companies in the past for claiming that tighter controls on tobacco use in some countries violate trade laws. House Ag Committee Chairman Michael Conaway, R-Texas, pointed to the tobacco provision in a statement Monday, saying the language is "establishing a dangerous new precedent that could negatively impact agriculture going forward."

Chris Clayton can be reached at chris.clayton@dtn.com

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(CZ/BAS)

Chris Clayton