TPP agreement to boost agricultural trade

by World Grain Staff
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ATLANTA, GEORGIA, U.S. — Ministers of the 12 Trans-Pacific Partnership (TPP) said on Oct. 4 that after five years of negotiations they have reached a trade agreement that will in part eliminate or significantly reduce tariffs for agriculture products, deter non-science based sanitary and phytosanitary barriers, eliminate export subsidies, support jobs and drive sustainable growth.

“TPP brings higher standards to nearly 40% of the global economy,” the Trans-Pacific Partnership Ministers said in a statement. “In addition to liberalizing trade and investment between us, the agreement addresses the challenges our stakeholders face in the 21st century, while taking into account the diversity of our levels of development.  We expect this historic agreement to promote economic growth; support higher-paying jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in our countries; and to promote transparency, good governance and strong labor and environmental protections.”

The TPP is made up of 12 countries: Australia, Canada, Japan, Malaysia, Mexico, Peru, the U.S., Vietnam, Chile, Brunei, Singapore and New Zealand. These countries work together to increase trade, exports and jobs in each represented country.

On agricultural products, the parties will eliminate or reduce tariffs and other restrictive policies, which will increase agricultural trade in the region, and enhance food security. In addition to eliminating or reducing tariffs, TPP parties agree to promote policy reforms, including by eliminating agricultural export subsidies, working together in the World Trade Organization (WTO) to develop disciplines on export state trading enterprises, export credits, and limiting the timeframes allowed for restrictions on food exports so as to provide greater food security in the region. The TPP parties have also agreed to increased transparency and cooperation on certain activities related to agricultural biotechnology. 

Agriculture groups, businesses and government officials applauded the agreement, saying it will expand trade of commodities among the TPP countries.

“In many parts of the world, food and agricultural products still face the legacy of high import barriers,” said David MacLennan, Cargill’s chairman and chief executive officer said. “We believe the Trans-Pacific Partnership will allow food to move more freely across borders from places of plenty to places of need, which benefits farmers and consumers around the world.”

Cargill encouraged the governments of the TPP countries to follow through on the progress made by the negotiators, as TPP would benefit many sectors of the world economy, including food and agricultural production. Farmers in producing countries could potentially reach nearly 500 million new customers in Asia, who would in turn gain access to more affordable, higher quality products.

Cargill said the TPP has the potential to set the standard for 21st century international trade, promoting the movement of goods, capital and ideas that spur economic growth, help combat world hunger, and raise labor and environmental standards.

Trade agreements have historically boosted export and import flows between participating nations, leading to higher-paying jobs and improved living standards.

“Over time, the most successful countries have been those that embraced international trade,” MacLennan said. “Modern trade agreements like the TPP will continue that trend, while also setting high standards for labor, human rights and sustainability.”

Countries in the TPP currently account for up to 42% of all U.S. agricultural exports, totaling $633 billion, said U.S. Agriculture Secretary Tom Vilsack in statement following the agreement. “Thanks to this agreement and its removal of unfair trade barriers, American agricultural exports to the region will expand even further, particularly exports of meat, poultry, dairy, fruits, vegetables, grains, oilseeds, cotton and processed products.”

The TPP will enhance Australia’s competitiveness, promote growth, job creation and higher living standards, said Australia’s Minister for Trade and Investment Andrew Robb in a release on Oct. 6.

“By setting common international trade and investment standards between member countries, the TPP will make doing business across the region easier, reducing red tape and business costs,” he said. “It will slash barriers to Australian goods exports, services and investment and eliminate 98 per cent of all tariffs across everything from beef, dairy, wine, sugar, rice, horticulture and seafood through to manufactured goods, resources and energy.”

Trade agreements play a critical role in the future of the feed industry, said American Feed Industry Association President and Chief Executive Officer Joel Newman. “This is particularly important as the future growth of the U.S. animal agriculture industry depends on international consumers, particularly, the growing population and middle class. TPP has the ability to ensure and create U.S. jobs, along with economically stronger rural communities."

Newman said the next step for AFIA is to review the final TPP text when it is released.

The National Corn Growers Association (NCGA) said it will carefully examine the agreement in the coming weeks to determine whether it is in the best interests of America’s corn farmers.

“We are hopeful that this agreement continues the tradition of past free trade agreements, which have had a positive impact for America’s farmers and ranchers,” said Chip Bowling, NCGA president.

The agreement is expected to increase the output of all grain exports from the U.S. by 11%, said Tom Sleight, U.S. Grains Council (USGC) and chief executive officer.

"With these facts in mind, we (USGC) look forward to working with our partners to evaluate the agreement produced by the negotiators, provide our best judgment on its merits and explain its benefits to our members that will inspire their support for the ratification process,” he said. “As we dig into the details of the agreement for grains and ethanol, we do so with expectation about the huge potential of markets that offer 800 million customers with a combined GDP of $28 trillion."

The TPP focused on five key features to set a new standard for global trade, these features include:

•Comprehensive market access: The TPP eliminates or reduces tariff and non-tariff barriers across substantially all trade in goods and services and covers the full spectrum of trade, including goods and services trade and investment, so as to create new opportunities and benefits for our businesses, workers, and consumers.

•Regional approach to commitments:  The TPP facilitates the development of production and supply chains, and seamless trade, enhancing efficiency and supporting the goal of creating and supporting jobs, raising living standards, enhancing conservation efforts, and facilitating cross-border integration, as well as opening domestic markets.

•Addressing new trade challenges: The TPP promotes innovation, productivity, and competitiveness by addressing new issues, including the development of the digital economy, and the role of state-owned enterprises in the global economy.

•Inclusive trade: The TPP includes new elements that seek to ensure that economies at all levels of development and businesses of all sizes can benefit from trade. It includes commitments to help small- and medium-sized businesses understand the agreement, take advantage of its opportunities, and bring their unique challenges to the attention of the TPP governments.  It also includes specific commitments on development and trade capacity building, to ensure that all Parties are able to meet the commitments in the agreement and take full advantage of its benefits.

•Platform for regional integration: The TPP is intended as a platform for regional economic integration and designed to include additional economies across the Asia-Pacific region.

To formalize the outcomes of the agreement, TPP negotiators will continue technical work to prepare a complete text for public release, including the legal review, translation, and drafting and verification of the text. 

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