Riding out TPP roller coasterRiding out TPP roller coaster
Commodity groups look to consider costs of TPP as Obama is "cautiously optimistic" agreement could be considered and approved this year.
February 29, 2016
President Barack Obama last week said he would send the Trans-Pacific Partnership (TPP) agreement to Congress for a vote later this year, and he is “cautiously optimistic” that the agreement will actually be considered and approved.
The TPP deal, which encompasses 40% of the world’s economy, would be a win for U.S. farmers by reducing tariffs and, even more important, addressing non-tariff barriers and creating a platform for other countries to join in the modern trade agreement. The 12 TPP member countries include some of fastest-growing middle classes, which will soon demand even more meat, dairy and eggs that are produced using grains.
The President’s comments are the latest in a roller coaster of encouraging and discouraging signs for the pact’s future in the U.S. Many congressional leaders have expressed skepticism, and political factors ahead of a U.S. presidential election and potential nomination of a new Supreme Court justice are complicating consideration of the already complex TPP agreement.
While speaking at a breakout session during the Agricultural Outlook Forum on Feb. 25, Jason Hafemeister, trade policy coordinator for the U.S. Department of Agriculture's Foreign Agricultural Service, said for agriculture, every sector benefits from bringing tariffs down and an improved competitive environment.
Many have wondered whether dairy, rice and now the pork industries will be supportive of the final deal once it comes up in Congress for a final vote. Hafemeister noted that, right now, many of these commodity sectors’ discussions are focused on not getting everything they wanted in terms of the TPP negotiations. The dairy industry, for example, wanted full access to Canada and Mexico but received only partial liberalization.
Hafemeister noted that, in the end, the groups will need to realize that the deal is better than the status quo. He said he is “highly confident” that when the vote comes up on Capitol Hill those groups will “advocate on their interests, not on their emotions, and that they’ll be supportive of this.”
He added, “Trade votes are tough, and we don’t have a lot of margin on these.”
Craig Thorn, partner at DTB Associates, also warned that there would be consequences more than just missing out on increased trade if the U.S. doesn’t ratify TPP and walks away. “If we turned down TPP, no one is going to negotiate with us. Not only will we lose out on economic opportunities during that period when it is sitting on the shelf, (but) our trade policy stays stagnated,” he said.
Many agricultural and business groups continue to push for the measure to be approved quickly so their members can begin reaping benefits from it.
The American Farm Bureau Federation made TPP a priority for its massive farmer fly-in to Capitol Hill held last week, releasing a study in conjunction with the event showing that the pact could boost annual net farm income in the U.S. by $4.4 billion.
TPP will also be front-and-center at the Commodity Classic event this week, which brings together the nation’s grower associations for corn, sorghum, soybean and wheat growers as well as sister organizations like the U.S. Grains Council that support market development around the world.
“While the timeline for TPP ratification within the United States still remains unclear, the Farm Bureau study is another sign of the benefits it would offer for farmers and agribusinesses including our members,” said USGC chairman Alan Tiemann, who farms in Nebraska. “As the most competitive producer of coarse grains, the best strategy that the U.S. industry can have is to remove market barriers and increase access to both new and existing customers.
“When that happens, through TPP or other trade agreements, the economics of U.S. production are so compelling that U.S. farmers win sales. TPP will clear the road for sales and for future market development that the Council specializes in.”
This agreement has the possibility to increase farm-prices for U.S. corn, soybeans and wheat as well, according to Farm Bureau.
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