U.S. agriculture should see tremendous benefits if Japan joins the Trans-Pacific Partnership (TPP) trade agreement, but some skepticism remains about whether Japan will complicate the negotiations further or facilitate the robust trade agreement sought.
Japan recently announced its intention to join the TPP talks, but countries currently participating in the negotiations must agree to allow it. Several countries are expected to make a decision soon on Japan's entry.
On April 12, the Obama Administration agreed to accept Japan's inclusion in the trade negotiations.
TPP is a regional trade negotiation that includes the U.S., Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, which account for a combined 30% of global gross domestic product. Japan already has free trade agreements with seven of the 11 TPP countries: Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam.
"The addition of Japan to the negotiations will exponentially increase the importance of TPP to our members and to other sectors of the U.S. economy," agricultural groups -- including the American Farm Bureau Federation, Cargill Inc., National Milk Producers Federation, National Pork Producers Council (NPPC), National Potato Council and U.S. Dairy Export Council -- said at an April 15 National Press Club event.
"As the fourth-largest U.S. agricultural export market, with nearly $14 billion in purchases in 2012, Japan is crucial to America's farmers and ranchers. Both the U.S. and Japan will benefit from Japan being a TPP partner and by sharing in improved sanitary and phytosanitary standards for agricultural trade and expanded market access with TPP nations," Farm Bureau president Bob Stallman said in a statement.
NPPC vice president and international trade counsel Nick Giordano said for the trade agreement to be a truly 21st-century deal, as the Obama Administration continues to assert, it must be comprehensive and must focus on market access outcomes that exceed previous U.S. free trade agreements.
Japan's economy is second only to China's in the region, and it is the fourth-largest market for U.S. agricultural exports.
In 2012, Japan was the second-largest export market for U.S. beef, at $1 billion in sales, and the top export market for U.S. pork by value, accounting for almost $2 billion in sales. Japan also is the number-one export market for U.S. corn, importing 453 million bu. in the 2011-12 crop year.
In a briefing with members of the North American Agricultural Journalists on April 8, Ambassador Islam Siddiqui, the U.S. chief agricultural negotiator, said Japan has agreed, like all of the nations involved in the TPP discussions, to bring everything to the table to achieve the high standards and comprehensive goals of an agreement.
"Each country has some sensitivities, including the U.S. Those sensitivities will be part of these negotiations," Siddiqui said.
Japan has been known to institute protectionist measures, such as tariffs and other trade barriers, to shelter its agriculture industry. Giordano noted that when any country begins to negotiate a free trade agreement with the U.S., the end goal will be to eliminate tariffs and excessive regulations.
"We know agriculture is sensitive not only in Japan but in many countries," Giordano said, adding that exclusions are a "slippery slope" and reiterating that the greatest overall outcome is to reduce all trade barriers.
Negotiators will recognize those sensitivities and implement phase-out periods that can create a "smoother landing for those projects," Giordano said.
He explained that Japan and the U.S. consulted for two years before Japan made its move to join the TPP talks, and Japan is aware of what's at stake and what is expected of it.
Devry Boughner Vorwerk, director of international business relations for Cargill and co-chair of the U.S. Business Coalition for TPP, added that because the agreement is regional, Japan and other economies in the region recognize that they can't sit on the sidelines. Japan's entry into the discussions has created "great momentum," she added.
The TPP negotiations are expected to wrap up this year.