The 11 remaining member countries of the Trans-Pacific Partnership (TPP) struck a deal Jan. 23 to save the multilateral trade deal, albeit without the U.S. President Donald Trump withdrew from TPP as one of his first actions in office in 2017 despite cries from the agriculture sector to move forward with the agreement as it offered opportunities to lower tariffs for U.S. agricultural goods and increase market access to the Asian countries in TPP.
The Comprehensive & Progressive Agreement for the Trans-Pacific Partnership (CPTPP) is a reboot of TPP comprising all of the original members except the U.S. The members nearly came to an agreement in November 2017 before Canada backed away and delayed further talks into 2018.
The deal was reached after two days of talks in Tokyo, Japan. Toshimitsu Motegi, Japan's economy minister, said the new CPTPP would be an "engine to overcome protectionism" emerging in parts of the world.
“The agreement reached in Tokyo today is the right deal,” Canadian Prime Minister Justin Trudeau said at the World Economic Forum in Davos, Switzerland. “Our government stood up for Canadian interests, and this agreement meets our objectives of creating and sustaining growth, prosperity and well-paying, middle-class jobs today and for generations to come.”
"This outcome reaffirms the CPTPP countries' collective commitment towards greater trade liberalization and regional integration," Singapore's Ministry of Trade & Industry said in a statement.
The deal comes at a pivotal time, as the North American Free Trade Agreement (NAFTA) talks resume this week. Both Canada and Mexico are part of the CPTPP and have said they’ll look elsewhere for trade partners if NAFTA falls through.
With the CPTPP deal reached, both Mexico and Canada will have access to valuable Asian markets, which leaves the U.S. at a competitive disadvantage. A report from CoBank said this will be “disastrous for U.S. agriculture.”
Agricultural groups remain concerned that the U.S. remains on the outside as other countries continue to advance their trade agendas.
U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) said since the deal excludes the U.S., it puts overseas demand for U.S. wheat at serious risk. Japan imports an average of 3.1 million metric tons of U.S. wheat every year. After full implementation of the new TPP, Japan’s import tariffs on Canadian and Australian wheat would drop by about $65 per ton.
“That would put U.S. wheat producers at a total price disadvantage of more than $200 million per year from TPP alone,” said Ben Conner, USW director of policy. “As the agricultural community warned when the President made the announcement, withdrawing from TPP was shortsighted and unnecessary, and now U.S. wheat farmers could take the hit.”
Kent Bacus, director of international trade and market access for the National Cattlemen’s Beef Assn., said, “Withdrawing from TPP was a missed opportunity for the United States to gain greater access to some of the world’s most vibrant and growing markets. As we now enter a pivotal round of NAFTA negotiations, the last thing we need is to take a step backwards in our relationships with Canada and Mexico. We encourage negotiators in Montreal (Que.) to continue building on the progress made in previous rounds so the United States can focus on tearing down trade barriers in Asia and around the world.”
Bacus also criticized the U.S. Senate for not confirming Gregg Doud as the chief agricultural negotiator. Sen. Jeff Flake (R., Ariz.) has put a hold on Doud's nomination. Bacus said this leaves the agriculture sector “unfairly underrepresented at the world’s negotiating table.”
The wheat groups said it should become a "rallying cry" for U.S. agricultural groups to call for additional trade discussions. “As expected, the remaining members of TPP are moving forward without the United States,” said NAWG president Gordon Stoner, a wheat grower from Outlook, Mont. “If nothing else, this announcement should serve as a rallying cry for farmers, ranchers and dairy producers calling for the new trade deals we were promised when the President walked away from TPP. The heat needs to be turned up on the Administration and on trade negotiations with Japan. An already stressed agriculture sector needs the benefit of free and fair trade now.”
The 11 CPTPP countries include Canada and Australia, which are major competitors to the U.S. in the Japanese wheat market. Other TPP countries with rapidly growing demand for imported wheat include Mexico, Vietnam, Malaysia, Chile and Peru. Singapore, Brunei and New Zealand round out the remaining TPP partner countries.