US benefits of TPP revealed
The TPP, a trade deal between the US and 11 Pacific Rim nations, was agreed in principle on 6 October after negotiations lasting nearly five years.
The agreement still has to be tidied up and pass through a “legal scrub” before coming into effect, but in documents published on Thursday the USDA laid out what it believes will be “significant new market opportunities for US exporters”.
For beef exporters, the agreement “is necessary… to remain competitive in the region, especially since other TPP countries already enjoy preferential treatment under existing trade agreements”.
Japan is the United States’ top export market for beef with sales totalling $1.6 billion in 2014. “The TPP agreement will provide unprecedented access to Japan’s beef market,” the USDA said. “Japan will eliminate duties on 74% of its beef and beef product imports within 16 years, with substantial cuts to the remaining tariffs.”
Under the agreement, Japan will reduce its tariffs on fresh, chilled, and frozen beef cuts from the current rate of 38.5% to 9% within 16 years.
Tariffs on beef offal including livers and tongue, which are currently as high as 21.3%, will be eliminated within 16 years, in some cases with an immediate 50% cut in the tariff rate, the USDA said, while tariffs on processed beef products including beef jerky and meat extracts, currently as high as 50%, will also be eliminated within 16 years.
Tariffs will also be completely eliminated on beef and pork exports to Vietnam, Malaysia, New Zealand, and Brunei.
In return, the US will eliminate its tariffs on beef and pork products from the other TPP countries, currently as high as 26.4%, within 15 years.
American pork exporters can also expect significant benefits. In 2014, the United States exported $4.7 billion of pork and pork products to the TPP region and $6.7 billion to the world.
“Without the TPP agreement, US pork exports to the TPP region face a competitive disadvantage,” the USDA said. “Pork exports from Australia, New Zealand, and the ASEAN countries receive preferential tariff treatment from Vietnam due to the ASEAN-Australia-New Zealand Free Trade Agreement. When the European Union completes its trade negotiations with Japan and Vietnam, EU pork exports will likely also face lower tariffs than the United States currently faces. If the United States does not ratify the TPP agreement, other TPP members such as Canada are likely to ratify a similar agreement without us. The TPP agreement is necessary for US pork exports to remain competitive.”
Japan is the top market for US pork and pork products, with exports totalling $1.9 billion in 2014. “Because Japan is highly protective of its pork industry, in previous bilateral trade agreements it has either excluded pork altogether or provided only minor tariff reductions and very small tariff-rate quotas. Under the TPP agreement, Japan will eliminate tariffs on more than 65% of its pork and pork product tariff lines within 11 years and on nearly 80% of tariff lines within 16 years.
“In 2014, Japan imported $435 million of ground seasoned pork and $59 million of sausages from the United States. Japan’s 20-percent tariff on ground seasoned pork and 10-percent tariff on sausages will be eliminated in six years,” the USDA said.
Similar tariff reductions will also be applicable to the poultry industry.
The TPP deal, the USDA said, “will promote economic growth in the Asia-Pacific region, expanding demand for US food and agricultural products among nearly 500 million consumers in TPP partner countries. The TPP strengthens trade rules and provides specific new market access commitments for US agricultural exports.”
The TPP countries are Brunei, Chile, New Zealand, Singapore, Australia, Canada, Japan, Malaysia, Peru, the US and Vietnam.
