Trans-Pacific Partnership Progresses

The United States is concerned that adding new countries at this juncture could slow down the momentum of the talks. There is speculation on when new countries will join. Some say it is unlikely to happen in the coming months; others say that is unlikely to happen until late this year, at the earliest. Mexico is aggressively working to join as soon as possible, which may be due to the upcoming presidential elections on July 1. Once the elections are held, a government changeover could delay Mexico’s inclusion in the TPP negotiations.

Other future potential TPP participants include the Philippines, Papua New Guinea, Costa Rica and South Korea.

Martin, NAEGA: Japan has expressed interest, but its concern over the management of food safety is legitimate. It’s largely an import-dependent country and so it struggles with how to open its food supply market without a complex set of controls. Once the major decisions regarding those systems have been made, the best thing the United States can do is to support Japan in their decision making, as it is one of the best customers of U.S. agriculture products.

F&G: What makes the Asia Pacific region such an attractive market?

Gaibler, USGC: For the United States it’s important because there are over 100 different trade agreements in the Asia Pacific region itself — some bi-lateral and some regional — and we have not been participating in those, yet we know Asia will be a key driver of global economic growth.

The individual TPP partners are relatively small nations in terms of their economic size and growth, but the current negotiators combined constitute the fourth largest trading partner for the United States. If Japan were included, then it would rank as the second largest trading partner for the United States and represent 36% global GDP.

I think at some point China will take an interest, as well as other countries like South Korea, Taiwan and the Philippines. Once they understand the significance of this and the economic power behind it in terms of enhancing trade flows, other countries will consider joining TPP. Adding China alone would almost double the scope of the agreement, but it may not be ready because they’re transitioning into being less reliant on exports and shifting their emphasis on increasing domestic production and utilization.

F&G: How will the TPP directly impact American grain handling and exporting companies?

Martin, NAEGA: Without the TPP, there are uncertainties in trading with these countries due to lack of regulatory compatibility with respect to the sampling and measuring of grain. Regulations vary so dramatically, especially in the developing world, resulting in risk premiums in the transaction. The TPP would reduce those premiums considerably by improving the authorization and management of all those considerations that cost money to manage, like crop biotechnology, quality characteristics and other issues related to safety, mycotoxins and pesticide residues.

The cross-cutting issues and improvements that would be contemplated in the TPP would give us a leg-up from the efficiency standpoint and drive a portion of the price back to the producer and further incentivize production, which is good for the entire industry because it will lower the risks that are currently managed by trans-boundary shippers.

Tumbarello, AFIA: Japan is the United State’s fourth largest feed export market and fourth largest agricultural export market overall. While most animal feed enters Japan duty free, Japanese barriers to U.S. livestock exports are more restrictive. [If Japan were to join,] eliminating existing barriers and leveling the international playing field for trade would further develop Japan as an export market for the United States. The United States would ultimately be exporting more feed to Japan in the form of value-added products such as meats and dairy products, and those sales would benefit the U.S. feed, livestock and poultry industries, and their customers.

F&G: What phase of negotiations is the TPP in and when might it go into effect?

Tumbarello, AFIA: There is speculation on the timing of the conclusion of TPP negotiations. Last November, the leaders of the TPP countries met and announced the outlines of the agreement and reiterated their commitment to completing a “comprehensive, next-generation agreement.” While at the same time, Japan, Canada and Mexico expressed interest in joining the TPP negotiations. There is fear of losing momentum in the talks due to interest by other parties to join. While the negotiations are still very much in process, the United States Trade Representatives (USTR) has expressed the desire to have some kind of outcome by the middle of the year.