A report was released last month by Third Way concerning the Trans-Pacific Partnership, and how the trade deal handles agriculture since almost half of our exports head to TPP countries. Jay Chittooran, Policy Advisor for the Economic Program at Third Way, explains who they are and why they are looking at TPP.
From Third Way:
Get the full report here.
What Are the Major Ag Provisions in TPP?
U.S. agricultural production occurs in each of the 50 states, and more than $150 billion worth of agricultural goods get exported. Of that, over $63 billion worth of agricultural exports head to TPP countries. This includes beef to Japan, grapes to Malaysia, and poultry to Vietnam. Because every dollar of agricultural exports stimulates another $1.27 in business activity, it’s critical for policymakers to fully understand how a trade deal affects the sector overall. Here are three important agricultural issues in the agreement.
#1: Market Access. The fact that TPP cuts or eliminates more than 18,000 tariffs is often cited. Within that number, though, is a massive amount for American agricultural producers. Lowering the tariffs (i.e. taxes) that other countries put on American agricultural products helps make our products more affordable for foreign consumers—and therefore more enticing to buy. For example, once the TPP agreement is implemented, tariffs as high as 10% on U.S. cotton exported into Vietnam will be eliminated, and Japan’s “gate price” duty on pork will be reduced by 90%.
#2: Food Safety. U.S. food safety laws will not change at all under the agreement, as the deal affirms that American agencies can regulate food safety. TPP, however, does work to ensure that our foreign partners develop and implement food safety standards in a transparent way, using science-based criteria—as we do in the U.S. Food safety obligations are also enforceable to ensure these standards are properly applied.
#3: High-Standard Rules. TPP includes a host of other provisions that ensure the region’s agricultural standards are raised and that American producers can fairly compete. As part of TPP, all countries are required to eliminate agricultural export subsidies on all agricultural goods sold in member countries. For example, Mexico will not be able to use export subsidies on its wheat sold in TPP markets. Similarly, Canada’s domestic supply management system imposes prohibitive tariffs on dairy, poultry, and eggs from other countries, while their export subsidies for dairy provide an unfair advantage for Canadian products entering other markets. The trade deal eliminates export subsidies among member countries, and provides new access to Canada’s dairy, poultry, and egg market for the first time.
Also, for the first time in any U.S. trade deal, the agreement specifically covers agricultural biotech goods. Over 90% of corn, soybean, and cotton exports are derived from biotechnology, and the deal includes transparency, information-sharing, and shipping provisions. TPP also includes new rules to protect the use of common names when marketing food products, guarding against efforts by some of our competitors to limit the use of terms like “parmesan” and “feta.”