Trans-Pacific Partnership Agreement
NCFC urges Congress to pass the Trans-Pacific Partnership (TPP). For agriculture, the TPP offers tremendous opportunity to farmers and their co-ops to expand exports and generate additional economic activity across farm country. The agreement contains meaningful reductions in barriers erected by other countries to U.S. agricultural exports by lowering tariffs and working to ensure that sanitary and phytosanitary (SPS) standards are based on science.
TPP negotiations concluded with the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam in October, 2015. The President signed the TPP Agreement on February 4, 2016. Ratification rules in the TPP require that six countries, representing 85 percent of combined GDP, approve the agreement before it enters into force. Therefore, to meet this threshold both the U.S. Congress and Japan’s Legislature must pass the agreement.
TPP would benefit the agriculture sector primarily from market access provisions, such as reduced or eliminated tariffs and tariff-rate quotas (TRQs). In addition, TPP includes a chapter on SPS measures that build on the WTO’s SPS Agreement, provisions specific to trade in products of biotechnology, and addresses rules around the use of Geographic Indications (GIs).
Tariffs: In addition to providing overall increased market access by lowering/eliminating tariffs, in a number of cases, it will level the playing field for U.S. agriculture versus competing exporters. U.S. products are often at a competitive disadvantage in certain TPP markets due to tariff preferences provided through other agreements that the U.S. is not party to, such as the Japan-Australia Economic Partnership. Tariff disparities will continue to widen in those instances the longer TPP goes without being implemented.
Sanitary and Phytosanitary (SPS) Standards: The SPS provisions would require TPP countries to maintain science-based SPS measures and to clarify and build on provisions of the WTO’s SPS Agreement. The cooperative technical consultations process, along with the dispute settlement provisions in the TPP, represents an important advancement over the WTO SPS Agreement.
Biotechnology Provisions: TPP is the first U.S. agreement to include provisions specific to trade in products of modern biotechnology. The agreement would commit parties to provide transparency on government measures related to biotechnology trade, and provide information-sharing procedures for parties to follow when the low-level presence (LLP) of biotech material is detected in a food or agricultural shipment. It would also establish a biotech working group under the Committee on Agricultural Trade that would encourage information exchange and cooperation on trade-related matters.
Geographic Indications: Particularly important to the U.S. dairy sector, the TPP’s GI provisions would create an improved set of tools to combat the use of GIs in the future to block U.S. exports from TPP members. New due-process and transparency provisions governing the recognition of GIs, particularly GIs that may conflict with common food names in TPP markets, will significantly strengthen the ability of the U.S. to combat barriers and help to preserve market access opportunities for U.S. companies.
Future Opportunities: The additional market access gains for the U.S. under TPP will largely come from Japan and Vietnam since the U.S. currently has FTAs with Australia, Canada and Mexico, Chile, Japan, Peru, and Singapore. However, a number of countries that have significant market potential for U.S. agricultural exports have signaled their interest in joining the TPP in the future – Indonesia, Thailand, and the Philippines, to name a few.
In addition to the overall benefits to the U.S. agriculture sector, it will assist farmer cooperatives in their essential role in helping farmers gain financially from the global marketplace. Individual producers, who largely do not have the resources or production volume to export on their own, are able to use their numbers through co-ops to gain access to foreign markets. Co-ops use the earnings from these overseas sales to increase the patronage dividends paid directly to farmers. In this way, individual producers can profit directly from increased export opportunities that result from TPP.