Trade Deal Promises a World of Goods

The Trans-Pacific Partnership offers some major wins for agriculture, but it also raises some concerns.

Trade Deal Promises a World of Goods
The Trans-Pacific Partnership (TPP) is a deal truly global in scope. If approved by all of its signatory nations—the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam—the agreement will attempt to standardize trade rules across the 12 countries, representing 40 percent of the world’s economy. “This is a massive trade agreement,” says Ryan Findlay, North America industry relations lead for Syngenta. “It’s worth noting that.”

Ninety-five percent of the world’s customers are outside the U.S., which explains why foreign trading partners are so essential today. “For agriculture, it’s vital to secure access to this growing export market,” says Floyd Gaibler, director of trade policy and biotechnology for the U.S. Grains Council. “This has been termed a 21st-century trade pact because it provides a lot of benefits across the economic sectors.”

New Market Access

Expanded market access through the reduction or elimination of tariffs is the TPP’s major success. Open markets support the expansion of U.S. food and agricultural exports, help increase farm income and promote job growth. While crops such as corn and other grains haven’t faced many high tariffs in the past, this agreement will basically eliminate the tariffs that do exist, benefitting not only the commodities themselves, but also exports in all forms, says Zach Kinne, director of public policy for the National Corn Growers Association. “Things like meat products and ethanol that use corn for production currently do face high tariffs. Those tariffs will be either eliminated or reduced to provide meaningful commercial access.”

The agreement also whittles away at nontariff barriers such as biotech approval processes and sanitary and phytosanitary barriers, Kinne adds. “The agreement contains language to help reduce these nontariff barriers, which will hopefully reduce trade impediments for growers.”

Improving Biotech Acceptance

“For agriculture, it’s vital to secure access to this growing export market. This has been termed a 21st-century trade pact because it provides a lot of benefits across the economic sectors.”

Floyd Gaibler
The TPP also includes groundbreaking provisions for biotechnology, implying the recognition that agricultural biotechnology, especially genetic engineering (GE), is and will be an important tool to sustainably feed the world’s growing population. “This was the first time any trade agreement has proposed any language to address that,” Gaibler says. The TPP countries will agree to work together on situations of low-level presence of GE traits and to promote timely authorization of products of modern biotechnology.

The pact also establishes a voluntary working group to discuss and address these issues as they arise. “I think this is very positive, as we have had the increasing challenge of trying to deal with asynchronous biotech trait approval systems,” Gaibler says. “This is foundational language that could be useful in other trade agreements.”

Data Protection

All TPP members will abide by the same rules of data protection that the U.S. currently follows—a major win, says Doug Nelson, senior adviser for trade, intellectual property and strategic issues for CropLife America. It’s a crucial issue for agricultural advancement. If Syngenta creates a new molecule, he points out, the Environmental Protection Agency requests many tests, which create reams of data—trade-secret data that the U.S. government then possesses.

Federal regulations require the U.S. government to keep that data secret for 10 years, and Nelson is pleased to see the TPP demand that 10-year requirement of all participants. Trade partners, who would have access to that same data, also will keep it secret for 10 years. That stipulation keeps the incentive in place for companies to continue to create new and better products, Nelson says, which benefits everyone. “Without that R&D, we’re back to the old days.”

Potential Pitfalls

Not everybody in the industry is a fan of the agreement. Opponents from across the political spectrum worry the TPP will create a larger trade deficit by offering foreign competitors easier access to U.S. markets.

Currency manipulation by trading partners is another concern. The National Farmers Union (NFU) has been in the forefront of agriculture’s opposition to the pact. NFU President Roger Johnson submitted written testimony to the U.S. International Trade Commission to explain why: “TPP contains no enforceable measures to address the persistently increasing U.S. trade deficit or currency manipulation and will likely lead to the same negative overall outcomes of previous trade agreements,” he wrote.

U.S. tobacco groups and their supporters on Capitol Hill also have voiced objections to the exclusion of tobacco products from the TPP’s investor-state protections. Heavy opposition from tobacco-state members of Congress to the carve-out is strong enough that some congressional leaders, including Senate Finance Chairman Orrin Hatch (R-Utah) and House Ways & Means Chairman Kevin Brady (R-Texas), have warned it could imperil the TPP’s approval in Congress, unless the industry’s concern is addressed.

The TPP is a proposed trade agreement among 12 countries, representing 40% of the world’s economy.

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Other farm groups, such as the USA Rice Federation and the U.S. Dairy Export Council (USDEC), have expressed disappointment with the TPP and are still assessing its net benefits before offering their support. In a written statement, Michael Rue, vice chairman of USA Rice’s International Trade Policy Committee says, the “gains achieved in Japan were, unfortunately, less than our modest objectives.” And USDEC President Tom Suber writes that the agreement “falls short in providing the degree of market access we had been seeking, but it also avoids a disproportionate opening of the U.S. market to [foreign] dairy exporters.”

Proponents, meanwhile, encourage the ag community to be vocal in their support and communicate about the importance of trade. Agricultural trade supports their bottom line and more than a million jobs in the U.S., Kinne says. “In order for us to be competitive in the future with those 95 percent of consumers who are outside the U.S., we need free trade agreements like TPP.”

Regardless of their point of view on the TPP, many in the ag sector believe that a global mindset is increasingly necessary for agriculture in the 21st century. “Farmers in the U.S. today have to think beyond the mailbox like never before. They need to think globally,” Findlay says. “We talk about the U.S. feeding the world—this agreement could be an opportunity to develop a broader marketplace where we can do just that.”