TPP Sprint

Aggies Want Trade Agreement This Year

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The Trans-Pacific Partnership includes the U.S., Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The trade deal encompasses roughly 800 million people and more than 40% of the global gross domestic product. (Graphic by Japinderum, Phospheros and Orser67, CC BY-SA 2.0)

OMAHA (DTN) -- Time may be running out to approve the Trans-Pacific Partnership, or TPP.

Hundreds of agriculture interest groups led by the National Cattlemen's Beef Association are making a final push for the passage of the TPP before the end of 2016.

The fear is if the trade agreement is not passed and signed this year before the U.S. presidential election, none of the current presidential candidates would necessarily back the proposal. Only Republican presidential candidate John Kasich has expressed support for the TPP.

U.S. Trade Representative Ambassador Michael Froman told reporters Wednesday he believes TPP will get done this year -- before the next administration takes office.

Froman said support for the agreement from the current president, the speaker of the House and other leaders, means the time to act is now.

"It creates a window of opportunity to get that done," he said.

So far, the recent push by hundreds of agriculture groups to get the TPP across the finish line is unprecedented, said Chase Adams, communications director for the National Cattlemen's Beef Association.

"I don't think anyone has been as vocal on the Hill as ag, and I am proud that cattlemen have led our support going back to urging finalization in Atlanta in October," Adams said.

More than 300 cattlemen from across the country are on Capitol Hill this week talking to lawmakers about the agreement.

Froman said getting TPP through Congress may take some time, as many representatives and senators continue to gauge where constituents stand on the proposal.

"We are up on the Hill all the time talking to members about how they will benefit their constituents," he said. "We could lose market share in the region by delay. There is a lot to lose here by delay. We think Congress will ultimately act... We need to get beyond sound bites into the substance of the agreement."

The TPP includes the U.S., Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The trade deal encompasses roughly 800 million people and more than 40% of the global gross domestic product. That makes the trade deal the largest ever and also the most complex in terms of trade rules.

For agriculture, the talk on TPP comes down to a broad array of numbers. For instance, 50% of U.S. agricultural exports to Japan, by volume, would immediately become duty free once the trade deal goes into force.

In recent weeks, agriculture groups have stepped up the pressure on members of Congress to pass TPP. When it comes to U.S. beef exports to the Pacific nations, the agreement would level the playing field on tariffs.

Even without the agreement, the Obama administration has expanded beef exports from $3.1 billion seven years ago to $6.3 billion last year.

TPP is in a tenuous position because of a lack of support from the presidential candidates in both parties. It is unlikely TPP would be taken up in the Senate until after the presidential election. However, there are also indications Senate Majority Leader Mitch McConnell, R-Ky., could opt not to take up the trade pact at all if Republicans lose control of the Senate.

A recent study by a group called the Peterson Institute said the U.S. economy loses about $98 billion in economic benefits every year TPP is delayed.

Froman said by 2030, two-thirds of the world's middle class will call Asia home.

"However, exports of American beef to countries in the TPP are being hit with tariffs as high as 50% and face all manner of non-tariff barriers," he said.

The agreement is said to cut more than 18,000 foreign taxes on U.S. exports.

Froman said it is estimated that U.S. beef exports would increase by 444 million pounds as a result of TPP, resulting in increased cash receipts totaling $1.14 billion.

NCBA Vice President Kevin Kester, a rancher in California, said passing the TPP is critical to expanding market access.

"The U.S. cattle industry relies on international trade to add value and stabilize markets," he said. "Global consumers demand high-quality U.S. beef muscle cuts, but exports are especially critical in adding value to otherwise undervalued cuts such as variety meats and offal. While they have little value domestically, cuts such as tongue and tripe, fetch premiums in the Asia and Pacific Rim markets. There are no other global markets that can absorb that demand if we cannot remain competitive in the Pacific."

Earlier this week, a group of 225 agriculture interest groups signed a letter addressed to leaders of both the House and the Senate, pushing for TPP passage.

According to an analysis conducted by the American Farm Bureau Federation back in February, that trade is expected to increase for rice, cotton, pork, poultry, butter, cheese, soybeans and products and nonfat dry milk.

Though the analysis projects net trade for corn would decline by 45.3 million bushels, overall demand and use for corn is forecast to increase by 54.2 million bushels. In addition, corn revenues would be expected to rise by $680 million per year. Corn prices were projected to rise by about 5 cents per bushel as a result of higher domestic feed use from additional beef and pork exports created by TPP, according to AFBF.

Todd Neeley can be reached at todd.neeley@dtn.com

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(AG/CZ)

Todd Neeley