Japanese Prime Minister Shinzo Abe announced his country’s intention to participate in the Trans-Pacific Partnership (TPP) negotiations. The news was praised by many in the U.S. agricultural sector due to the lucrative market Japan brings to the table.
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. Japan’s economy is second only to China’s in the region.
The TPP is a regional trade negotiation that includes the United States, Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, which account for a combined 30% of global GDP. Japan already has free trade agreements with seven of the 11 TPP countries: Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam.
"Japan's role in TPP can be a positive and game-changing event," said Devry Boughner Vorwerk, director of international business relations for Cargill and co-chair of the U.S Business Coalition for TPP. "As one of the world's largest economies, Japan enhances the commercial meaningfulness of any agreement."
Japan is the top value export market for U.S. pork accounting for almost $2 billion in 2012 sales.
“The addition of Japan, the No. 3 economy in the world and a major dairy importer, would dramatically increase the commercial significance of the talks,” says Tom Suber, U.S. Dairy Export Council (USDEC) president. “Along with Canada’s recent announcement that it will join the talks, Japan’s involvement will add additional potential for greater U.S. dairy exports, which will supplement the opportunities in existing TPP participants’ markets such as Vietnam and Malaysia.”
The 16th round of TPP talks just concluded in Singapore; the 17th round is set to take place in May in Lima, Peru. Japan will not likely join the talks until late August.
USDEC noted though that Japan's enrollment could bring with it certain challenges. Japan’s entry at this stage of the talks has sparked concern that it could slow the pace of negotiations with the potential to delay or derail the ambitious outcome that the current members are seeking.
Bob Stallman, president of the American Farm Bureau Federation (AFBF) noted that it’s important that new entrants to the TPP "recognize this is a comprehensive agreement and that individual sectors should not be excluded from the negotiation. The TPP provides an opportunity to strengthen trade relationships, address remaining barriers and improve the competitiveness of the Asia/Pacific market.”
Jaime Castaneda, senior vice president for strategic initiatives and trade policy, National Milk Producers Federation and USDEC said the addition of Japan will only be beneficial if negotiators can achieve real, tangible market access. “Japan would not only need to loosen its restrictive market access scheme, but also liberalize its complex quota system and address non-tariff trade concerns, such as how its food additive approval system currently operates.”
U.S. ag groups hope to go beyond just lowering tariffs on issues such as the right to use common food names and implementing science-based regulations on the application of sanitary and phytosanitary (SPS) measures.