Trans Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP)

 

Issue

The major issue in trade for the Asia-Pacific region is the progress of the Trans Pacific Partnership negotiations. The aim of the negotiations is to reach a comprehensive, high-standard agreement that will improve the conditions of trade in the region and boost economic activity in all participating countries. The inclusion of Japan to these negotiations enhances the significance of the TPP, makes the agreement much more encompassing of U.S. goals in general and for agricultural trade specifically, and generates greater interest and support for the TPP overall.

The United States and the European Union are in negotiations towards a comprehensive trade agreement, called the Transatlantic Trade and Investment Partnership (TTIP). The negotiations aim to expand the world’s largest commercial relationship with $1 trillion of trade in goods and services annually and $3.7 trillion in two-way direct investment. The U.S. exported $12.7 billion in agricultural products to the EU in 2014 while the EU exported $18.7 billion in agricultural products to the U.S.

Background

The TPP participating countries currently include Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, Japan, and the United States. Australia, Canada, Chile, Mexico, Peru and Singapore already have Free Trade Agreements (FTA’s) with the U.S. For these countries U.S. agricultural exports already have mostly tariff-free access, with the exception of dairy and poultry products going into Canada. The others, including Japan, represent the opportunity to gain new access by eliminating tariffs and by reducing non-tariff barriers with all the countries in the TPP.

Japan is our fourth-largest agricultural export destination, with $12.7 billion in sales in 2014. While Japan is a top market for U.S. agricultural exports of wheat, corn, soybeans, beef and pork it also has many restrictive policies in place against U.S. agricultural imports. Further export growth is inhibited by substantial tariffs on beef, pork, dairy, horticulture, rice and other products, along with various sanitary and phytosanitary barriers.

The Asia-Pacific region holds great promise for U.S. agriculture and its role as the food supplier for Americans and the world. Strong leadership by the U.S. in the current TPP negotiations and in continuing trade engagement with the nations in the region will yield positive results for American agriculture’s most dynamic international marketplace.

The issues around sanitary and phytosanitary (SPS) measures and their impact on trade have been a significant part of the agricultural relationship between the U.S. and EU. Continuing barriers to the export of U.S. beef, pork and poultry, along with the slow approval process for biotech products, are major areas of interest in the negotiation. Both the U.S. and the EU adhere to the World Trade Organization’s (WTO) SPS Agreement, which states that measures taken to protect human, animal or plant life or health should be science-based and applied only to the extent necessary to protect life or health. The U.S. follows a risk-assessment approach for food safety while the EU is additionally guided by the ‘precautionary principle’ which holds that where the possibility of a harmful effect exists, non-scientific risk management strategies may be adopted.

The EU has made the ‘precautionary principle’ the focus of its approach to risk management in the SPS area. The U.S. views the use of the ‘precautionary principle’ as inconsistent with the WTO SPS Agreement and as a basis for scientifically unjustified barriers to trade.

Farm Bureau is asking for substantive changes to the EU approach for approving the products of biotechnology. Substantial declines in the exports of corn and soybeans to the EU have been the direct result of restrictive import policies. The EU system for regulating biotech products must be science-based and efficient in generating approvals for U.S. products.

The EU system of geographic indications (GI’s) for foods and beverages that designate their production from a specific region are legally protected for their original producers. The U.S. has opposed recognizing geographical names for foods that would inhibit the marketability and competitiveness of U.S. food products.

Tariff reduction and the use of tariff-rate quotas (TRQ’s) and safeguards for sensitive products will also be a part of the negotiations. The negotiation proposal calls for working towards the elimination of tariffs. The average U.S. tariff for imported agricultural products is 5 percent, with 75 percent of tariff lines at zero to five percent tariff. For the EU, the average tariff on imported agricultural imports is 14 percent, with 42 percent of tariff lines at zero to five percent tariff.

Status

Negotiations on the TPP Agreement are ongoing with dairy product access among New Zealand, Canada, Japan and the U.S a particular concern.

Negotiations between the U.S. and the EU are continuing.

Farm Bureau Policy

Farm Bureau policy for trade negotiations includes as objectives:
1. Include all agricultural products and policies in the negotiations
2. Elimination of non-tariff trade barriers
3. Ensure market access for biotechnology products
4. Address issues concerning import sensitive products
5. Opposition to the use of geographic indicators
6. Opposition to the Precautionary Principle

Farm Bureau is supporting added enforcement mechanisms for new SPS regulations in the TPP and the restriction of ‘safe harbor’ provisions that would allow nations to maintain trade distorting barriers to specific agricultural imports.