ALL boats float when trade agreements help reduce trade barriers.
With 12 countries committed to promoting trade within the Trans-Pacific Partnership (TPP), "We've got one country — Japan — that feels entitled to keep five 'sacred cows' off the table," Sen. Chuck Grassley (R., Iowa) said in a media call with agricultural groups March 13.
Those five cows really could be more like eight. In current negotiations, Japan has said it cannot accept lower tariff lines in the categories of beef and pork, dairy, wheat and barley, sugar plus rice and starch.
Japan wants to exempt 586 tariff lines from elimination, or 11% of its tariff schedule. If you're comparing apples to apples, of the 17 other free trade deals the U.S. has concluded this century, only 233 tariff lines total were exempted from elimination.
Japan's decision to enter the TPP talks last fall was met with great excitement from the agricultural community. Japan is the fourth-largest market for U.S. agriculture, accounting for $13.5 billion of products in 2012.
Much more is at stake beyond increased market access for the U.S.
Most notably, Nick Giardano, vice president and counsel for international affairs at the National Pork Producers Council, explained that if Japan is allowed to classify agricultural products as sensitive, other countries in the TPP talks — or others who may join in the future such as China — could try to make similar demands.
Furthermore, the U.S. could be tempted to try to restrict some of its own agriculture sectors, setting a poor precedent all around and weakening the goals of a 21st-century trade agreement that will have implications for the next 25 years.
Exempting food and agriculture is not a wise idea, Giardano said: "Exempting food from trade deals would be upward pressure on food prices and undermines global security."
Agriculture represents a surprisingly tiny share of Japan's total gross domestic product, at just 0.5%, and half of that is rice.
Giardano said Japan's agriculture sector is ready for reform and should follow Korea's lead in dropping virtually all of its agricultural tariff lines as it did in the recent trade deal with the U.S.
Walter Powell, chairman of the U.S. Wheat Associates joint international trade policy committee, said the hope is that Japan will come around and remove all of its barriers, but if now isn't the time, negotiators should go ahead and conclude TPP without Japan.
"It's better to have a clean TPP rather than remove flaws sometime in the future," he said.
Grassley noted that TPP would still be a good agreement without Japan but would be "many more times" valuable with the superpower in the mix. Grassley said he doesn't want to send any signal that the U.S. shouldn't try to keep the agreement as broad as possible.
Giardano noted that he doesn't think the issue is "insurmountable." He added, "I applaud our trade officials for holding firm. I do believe if we continue to push, Japan will relent."
In the end, Grassley said it will be important for U.S. negotiators to hold Japan's feet to the fire. The agriculture industry's satisfaction is very important for U.S. approval of a final trade deal.
"Agriculture tends to be the locomotive that brings along manufacturing and services when an agreement is before the Senate," he said.