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U.S. Trade Representative Michael Froman will give congressional lawmakers an update on the Obama administrationís trade agenda Thursday, including its efforts to close out Trans-Pacific Partnership negotiations. While that agreement is expected to be concluded in the coming months, U.S. agricultural groups are concerned that it may fall short of the comprehensive deal they had hoped for.
Thatís because Japan ó one of 12 TPP countries and the key TPP market for a majority of U.S. agriculture ó wants to exclude from the negotiations a number of ďsensitiveĒ agricultural products, including beef and pork. Thatís a non-starter for U.S. agriculture, which wants elimination of tariff and non-tariff barriers on all American farm products.
Unfortunately, Japanese Prime Minister Shinzo Abe is under enormous political pressure to maintain tariffs on agricultural imports. The irony is that Japanís agricultural sector represents less than 1 percent of the countryís gross domestic product, with rice accounting for half of that; and, by Abeís own admission, it needs massive reform. The resolution of this internal struggle will determine the value of Japanís membership in the TPP and, possibly, of the TPP itself.
Historically, support from the U.S. farm sector has been critical to ensuring congressional passage of implementing legislation for trade agreements, but that support likely wonít exist for a TPP agreement that does not eliminate tariffs on farm products.
Japanís position on agricultural products also has broader implications for concluding the TPP negotiations anytime soon. When one member doesnít eliminate tariffs on a broad swath of products, others are compelled follow suit. Japanís failure to eliminate tariffs on a large number of food and agricultural products would result in the withdrawal of concessions to Japan not just by the United States but by other TPP members. Some of those countries no doubt are looking for such an excuse to protect their own sensitive products.
The result would be a downward spiral of expectations for the TPP, with the deal moving from a comprehensive, first-class agreement to one that may have difficulty generating the level of interest and support needed here at home to gain congressional approval.
No one should be misled about the seriousness of this problem. Although Japan says it is asking for exceptions for just five categories of agricultural products, several products are lumped together (such as beef and pork). In fact, there are eight categories ó dairy, sugar, pork, beef, wheat, barley, rice and starch ó but each of these can cover dozens of products. Just check the dairy case and cheese section at the supermarket to see how many dairy products there are. In fact, the number of individual tariff lines that could be covered in Japanís exemption list is close to 600. Japan wants to exempt nearly three times more tariff lines from tariff elimination than are in all 17 previous U.S. free trade agreements. The tariff lines cover a large amount of current trade as well as a huge amount of potential trade.