THE TTALK QUOTES 

On Global Trade & Investment

 

Published Three Times a Week By

The Global Business Dialogue, Inc.

Washington, DC   Tel: 202-463-5074

Email: Comments@gbdinc.org

 

No. 41 of 2014 

THURSDAY, MAY 29, 2014     

 

   

Filed from Portland, Oregon  

     

Click here for Tuesday's TPP quote from the Prime Minister of New Zealand. 
JAPAN AND TPP: A HIGH-RISK SUGGESTION FROM AGRICULTURE

"[T]he alternative [to changing Japan's position] is suspending negotiations with Japan for now and concluding a truly comprehensive agreement with those TPP partners that are willing to meet the originally contemplated level of ambition."

The National Association of Wheat Growers
U.S. Wheat Associates
USA Rice Federation
National Pork Producers Council
International Dairy Foods Association
May 28, 2014
CONTEXT
Today's quote is from the "Statement on TPP Negotiations" issued yesterday by the five agricultural groups listed above.  Their clear concern is that the United States might agree to a tepid TPP agricultural package, one that leaves Japan's agricultural trade barriers largely intact.  The proximate spark for this statement was something Japan's Akira Amari told his TPP colleagues at their recent meeting in Singapore.  Mr. Amari is Japan's Minister for National Strategy and Economic Policy and in charge of Japan's TPP negotiations.  In Singapore he said that Japan "will not abolish tariffs in the five agricultural sectors it considers sacred," namely rice, wheat, beef, pork, and dairy.  Its immediate targets, we assume, are the U.S. and Japanese negotiators who are right now (May 29 and 30) discussing these issues in Washington. 

Yesterday's statement from the groups representing wheat, rice, pork and dairy producers has definitely gotten the world's attention.  Here it is in full:

Statement on TPP Negotiations

The National Association of Wheat Growers and U.S. Wheat Associates today join USA Rice Federation, the National Pork Producers Council and the International Dairy Foods Association in the following statement on Trans-Pacific Partnership negotiations.

Minister Amari's statement in Singapore that none of Japan's sensitive agricultural items will be fully liberalized may signal the end of hopes for the Trans-Pacific Partnership to become a truly comprehensive and forward-looking 21st century agreement. A country cannot shield its primary agricultural products from competition and still claim to be committed to a high-standard agreement liberalizing essentially all goods.

When Japan joined the TPP negotiations, it agreed to "to pursue an agreement that is comprehensive and ambitious in all areas, eliminating tariffs and other barriers to trade and investment," as stated in the earlier (November 12, 2011) TPP Trade Ministers' Report to Leaders. Yet according to several reports from the TPP Ministerial meeting just completed in Singapore, Japanese Minister of the Economy Akira Amari has now flatly told the other negotiating countries that Japan will not abolish tariffs in the five agricultural sectors it considers "sacred." Those five sectors include seven basic agricultural products, covering most of agricultural production: dairy, sugar, rice, beef, pork, wheat and barley. They also include many downstream products made from those seven items, such as flour and flour mixes made from wheat and rice.

The broad exemption that Japan is demanding will encourage other partner countries to withhold their sensitive sectors as well. The result would fall far short of a truly comprehensive agreement that would set a new standard for future trade agreements. In fact the TPP envisioned by Japan, if it stands, would be the least comprehensive agreement the U.S. has negotiated since the 21st century began.

U.S. negotiators still have a chance to push Japan to provide meaningful agricultural market access in the agreement. Failing that, the alternative is suspending negotiations with Japan for now and concluding a truly comprehensive agreement with those TPP partners that are willing to meet the originally contemplated level of ambition. It is a big step but one that will be justified if Japan continues to refuse to open its agricultural sector to meaningful competition.


COMMENT
Whether this statement will achieve its desired effect is an open question.  But again, people are paying attention.  A couple of headlines make that point:

"US eliminates its rivals: wants Japan to be excluded from Pacific trade talks"  from The Voice of Russia. 

"Ag Coalition Wants to Dump Japan from TPP Talks," from Farm Futures.

"Japan ready to lower pork tariffs for TPP," from The Japan Times.

Was it a good idea to issue this statement?  Candidly, we have no firm opinion on that one, and it doesn't matter.  On the downside, the wide-of-the mark, misleading headline from The Voice of Russia does serve as a reminder that statements like the one we highlight today take on a life of their own and can have unintended and unwanted consequences.  Here are some other considerations.

Agriculture's Support for Japan's Inclusion.  No sector in the United States pushed harder to bring Japan into the TPP negotiations, and it is doubtful that there is any sector of the U.S. economy that will be more critical to winning Congressional approval of a TPP agreement.  In short, there has to be something in it for U.S. agriculture or TPP as a whole is not credible.

The Groups Who Didn't Sign.  The five groups who authored the above statement are all important and their frustration is understandable - more on that below.   On the other hand, there are lots of important U.S. agricultural groups who are not signatories.  Our guess is that for many of those the problem was this: Difficult as it may be to negotiate with Japan, Japan is the real reason they are interested in TPP negotiations at all, and so threatening to drop Japan was a step too far.

The Changing Landscape.  Compounding that reality is another.  As one observer put it to us yesterday, "Nothing happens in a vacuum anymore."  Everyone, including all the TPP partners, are doing other things.  The recently announced trade agreement between Australia and Japan only underscores that.

The Time Lag of a Partial Deal.  And yet, though things don't happen in a vacuum, they are sequenced.  Thus, for example, it is more than likely that the agricultural issues between Japan and the United States will be settled - and the details of that settlement leaked - long before there is a final Trans-Pacific Partnership Agreement, much less Congressional consideration of it.  If those agriculture provisions are not good ones, that period of vulnerability could be death row for TPP. 

Pork Producers' Concerns.  With those realities in mind, it is worth paying close attention to what groups like the National Pork Producers Council are saying.  In a statement issued yesterday, Dr. Howard Hill, a pork producer from Cambridge, Iowa, and president of the National Pork Producers Council explained that:

"Allowing Japan to exempt products from going to zero tariffs and preserving the gate price on pork sets a horrible precedent.  Other TPP countries may demand similar treatment, which could jeopardize the entire agreement, and that precedent would make it much harder to obtain a good outcome for pork and other agricultural products in future trade deals."

The same NPPC press release compared Japan's reservations on tariff elimination to what has been done in other agreements:

"Japan is demanding special treatment for its agricultural sector, including exempting pork and other "sensitive" products from tariff elimination. The United States never has agreed to let a trading partner exempt as many tariff lines as Japan is requesting - 586. In fact, in the 17 free trade agreements the United States has concluded since 2000, only 233 tariff lines combined have been exempted from having tariff elimination."

Trade Promotion Authority.  Finally, we have to wonder, would it make a difference in all of this if the U.S. negotiators had a clear mandate in the form of on-the-books Trade Promotion Authority?  We think it would.  Oh, the negotiations would still be very tough, but things would be just a little clearer, just a little easier.
RELATED EVENT
On June 5, from 9 to 10:30 a.m. - GBD and the U.S. Chamber of Commerce will co-host The TPP Milk Shake: Perspectives on Dairy and the Trans-Pacific Partnership.  This session to be held at the Chamber of Commerce will feature experts from the U.S., Canada, and New Zealand.  Click the link for registration options and other details.   

SOURCES & LINKS
Statement on TPP Negotiations.  Here is the text of this statement, the source of today's quote, as it appears on the website of the National Association of Wheat Growers.

Japan and the TPP Bus.  This story from the Malaysian Digest includes the description Minister Amari's comments on the "sacred" five agricultural sectors mentioned in the Context section above.

From the National Pork Producers Council is a link to the separate statement from this group cited above.
SUBSCRIBE
If you want to receive these TTALK Quotes, we're happy to send them to you.  That's the deal.  If you want to help and ensure that they keep coming, please


SUBSCRIBE NOW
It's just $50 a year.  Click here and you' re done.

Buy Now
Thank you.

Note: GBD Members are already subscribers and we thank them for their membership and support.

 

 

 

 

TO GET THE TTALK DAILY QUOTE IN YOUR INBOX

 

Or Other GBD Notices, Click below. 

Join Our Mailing List

 

© 2014 The Global Business Dialogue, Inc.

1140 Connecticut Ave., NW, Suite 950

Washington, DC   20036

Tel: (202) 463-5074

R. K. Morris, Editor

www.gbdinc.org