WASHINGTON, D.C., U.S.  — The International Trade Commission (ITC) on May 18 released itsreporton the economic impacts expected to accrue from the adoption of the Trans-Pacific Partnership (TPP). For the entire agriculture and food sector, the report forecasts a $7.2 billion increase in exports or a growth of about 2.6% by 2032 compared to the same time frame without TPP. 

The report recognized that the U.S. wheat industry would see substantial gains in market access and subsequent exports to Vietnam where the United States currently competes at a tariff disadvantage to Australian suppliers. Specifically, the ITC notes that U.S. wheat and other grain exports to Vietnam would increase by a healthy 25.3% by 2032 under TPP. However, ITC also concludes that U.S. wheat exports to Japan would decline by 17% under TPP. 

“Given our industry’s 60 years of experience in the unique Japanese market, we respectfully believe that ITC got this one wrong,” the U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) said in a joint statement.

There are two distinct markets for wheat in Japan: one for high quality food grade wheat and one for lower quality, lower priced livestock feed wheat. Japan has consistently imported about 60% of its annual milling wheat needs from the U.S., with Canada and Australia making up the balance. Because access to Japan’s milling wheat market would remain equal among the three suppliers under TPP and because Japan requires different types of wheat for distinct uses, USW and NAWG said they see no reason why U.S. sales would decline. 

Regarding the feed wheat market, ITC notes that Canada would see higher feed wheat sales under TPP because it is a “low-cost producer.” If Canada has such an advantage over U.S. wheat producers, then why has U.S. wheat made up 45% of Japan’s feed wheat imports on average since 2013 while only 20% has been imported from Canada? The relative cost of feed wheat compared to alternative feed grain has far more to do with Japan’s feed import decisions than cost of production, USW and NAWG said. As long as corn and other feed grain alternatives remain inexpensive, Japan does not buy much feed wheat from any origin. 

ITC’s statement that Canada is positioned to outcompete the U.S. in either milling or feed wheat sales to Japan is out of touch with the reality of Japan’s preferences for U.S. wheat, the wheat groups said. It also fails to recognize that Canada’s competitive position with respect to the U.S. would be unchanged under TPP, USW and NAWG said.  

Modeling policy impacts to individual countries 16 years in the future is inherently difficult theoretical work. The reality is that TPP reduces barriers facing U.S. wheat farmers and keeps the U.S. on a level playing field with two of its largest competitors, USW and NAWG said. That is particularly important because Canada and Australia continue to seek tariff advantages by negotiating and signing free trade agreements in competitive markets at a much more rapid pace than the United States. 

“The assumptions made in the ITC report are disappointing and misleading,” said Gordon Stoner, NAWG president. “U.S. wheat farmers stand to benefit from a lower MAFF (Ministry of Agriculture, Forestry, and Fisheries) markup and new market access in Japan and from being able to compete on a level playing field in Vietnam. Congress should act quickly to enable farmers to take full advantage of the potential economic opportunities at stake under TPP.”