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Pending trade deal opens markets for Midwest farmers, but raises concerns among some groups

by Carolyn Orr ~ November 2015 ~ Stateline Midwest »
Even without a new Trans-Pacific Partnership, U.S. agriculture producers have deep ties to the 11 other countries involved in the potentially historic new trade deal.
About 45 percent of the nation’s farm exports already have these nations as their destination, and as the U.S. Congress decides whether to approve the TPP, one of the deciding factors could be this: Will this deal open up key foreign markets even further, for the benefit of the nation’s farmers and ranchers?
Soon after the deal was announced, many major agriculture associations were praising the deal as a “win” for U.S. agriculture.
“[It] holds enormous potential for expanded beef, pork, lamb and poultry exports, which also means good news for our crop producers through increased feed sales,” says Barry Carpenter, president of the North American Meat Institute.
Under the deal, Japan’s tariff on beef, currently as high as 50 percent, would be cut to 9 percent. There would be similar reductions in the country’s pork tariff, and Vietnam and Malaysia would eliminate beef and pork tariffs altogether.
According to Carpenter, these changes should result in immediate increases in red-meat sales to the Asian region’s 500 million consumers. Japan, Vietnam and Malaysia would also end most tariffs on fresh and processed fruits and vegetables.
The TPP, if approved, holds promise for U.S.-produced grains as well. Wheat sold to Japan, for example, faces a markup of $150 per ton; that would be cut by 45 percent over the next nine years. Also, tariffs on bread products would be eliminated — a potential boon for the Midwest’s Plains states, where wheat production is strong.
For dairy products, New Zealand has agreed to eliminate its tariffs, while Canada would open a share of its protected market. In return, the United States would eliminate most of its tariffs on imported dairy products.
Roger Johnson, president of the National Farmers Union, cites the opening of dairy markets as an example of why the TPP might be a double-edged sword for some Midwest dairy producers — they may get increased Canadian sales but face more competition at home.
“We are already exporting to most of these countries, so I don’t expect more than a small increase in market access and export sales as a result of TPP, which may be offset by increased imports,” Johnson says.
He warns, too, that the TPP does not address a fundamental problem with the trade relationship between the United States and some other countries: currency manipulation.
“While the agreement has some significant tariff reductions ... there are no sanctions against a [country] lowering [its] currency value,” Johnson says. “The value of our dollar as compared to their currency greatly impacts exports in commodities.”
The 12 countries in the TPP (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam) make up 40 percent of the world’s economy.
Formal congressional debate on the trade deal will begin soon after negotiators finalize and then release the full text of the 30-chapter agreement. That debate may not always center on the deal’s impact on agriculture, but it will be a consideration for U.S. lawmakers who represent farm-dependent areas in the Midwest.

 

Article written by Carolyn Orr, CSG Midwest staff liaison for the Midwestern Legislative Conference Agriculture & Natural Resources Committee.