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Beef Association Supports Trans-Pacific Trade Talks – DTN

Ernst Undesser
By Chris Clayton, DTN Ag Policy Editor February 6, 2015

The Trans Pacific Partnership talks are a rare opportunity for U.S. agriculture to lower tariffs and expand market access into Japan and other emerging Asian markets, a key player in the talks told cattlemen Friday.

Darci Vetter, chief agricultural negotiator in the U.S. Trade Representative’s Office, spoke to a trade committee for the National Cattlemen’s Beef Association about the critical juncture of trade talks in the Trans Pacific Partnership and what that means for U.S. beef producers.

Closing a deal on the Trans Pacific Partnership depends on Congress approving Trade Promotion Authority for President Barack Obama, Vetter said. Currently, trade negotiators are encouraged that it looks like Congress could vote on Trade Promotion Authority this spring. One of the challenges is that few members of Congress were in office the last time the House and Senate authorized TPA for a president.

“We’re very encouraged by the momentum on the Hill on both introducing and passing Trade Promotion Authority,” Vetter said. “We’re working very closely with leadership in both houses of Congress to try to get that done as soon as possible.”

NCBA has been a major backer of getting the Trans Pacific Partnership completed and is part of a coalition with other agricultural groups asking Congress to authorize Trade Promotion Authority.

Trade Promotion Authority, or TPA, outlines guidelines the administration must follow in closing a trade deal. However, the legislation also prevents Congress from amending trade agreements submitted by the administration. Congress must simply vote up or down on whether to pass a new trade deal.

Vetter noted the 12 current countries that make up the Trans Pacific Partnership account for 40% of the world’s gross domestic product. The trade deal included the United States, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Vetter also said the structure of the Trans Pacific Partnership will allow other countries to later join. South Korea, Taiwan and the Philippines have all expressed interest in joining the deal.

A recent study by the Peterson Institute for International Economics cited that the Trans-Pacific Partnership could increase U.S. exports of all goods by $123.5 billion and generate 650,000 U.S. jobs.

“Frankly, if we do not push this agreement across the finish line, we are going to lose ground because other countries are signing regional and bi-lateral free-trade agreements,” Vetter said.

Japan and Australia have a new agreement that cuts tariffs for Australian beef exports to Japan. That deal puts the U.S. at a tariff disadvantage to Australia in the Japanese market, the top beef and pork market for the U.S. Once fully implemented, Australian beef producers would have half the tariff of the U.S.

“This is giving Australia a significant advantage on tariffs,” Vetter said.

Currently, Japan places a 21.3% tariff on U.S. beef while Vietnam has a 34% tariff on U.S. beef.

Vetter said it was critical to use the Trans Pacific Partnership to cut overall tariffs in Japan for most commodities. In the past, Japan has largely avoided having agriculture as part of trade talks. “We may not have another opportunity to get the Japan market back to the negotiating table for a long time,” she said.

Bob McCan, president of NCBA, asked Vetter how the Australian-Japan trade deal would transcend into the Pacific deal and the U.S.

“We’re still negotiating with Japan on what our access to the Japan market would be under the TPP deal,” Vetter said. “Our goal is to get that tariff as close to zero as we can, as quickly as we can.”

Japan would then have to decide how it applies that access to other TPP countries. Most countries in the trade deal are planning to offer the same kind of tariff cuts, though.

At the CattleFax Outlook Feb. 5, an analyst said the Pacific deal could reduce beef tariffs to some countries from 38.5% to 9%. The change in tariff rates would be considered a massive win for U.S. beef producers.

Current cattle prices, including replacements, are averaging 20 percent more than a year ago, according to a Texas A&M AgriLife Extension Service study. Availability of young pairs and open cattle will continue to be a challenge for cattle producers looking to rebuild or expand herds. (Texas A&M AgriLife E xtension Service photo)

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Ernst Undesser
By Chris Clayton, DTN Ag Policy Editor February 6, 2015