Negotiators from 12 nations have finalized the Trans-Pacific Partnership (TPP), a landmark trade agreement marked by five years of intense negotiations. The United States and the 11 Pacific Rim nations involved represent one-third of world trade and 40 percent of global GDP. The deal carries extra weight given that some believe it could serve as a counterpoint to China’s economic agenda. Its finalization has been hailed optimistically by U.S. allies and U.S. negotiators; some feared that failure to reach a deal could have weakened Washington’s leadership in the region.
The agreement—the text of which should be available within the month—still faces scrutiny from the legislative bodies of all involved parties. Trade representatives from each nation entered negotiations seeking to expand cross border market access while balancing against domestic interests. If ultimately ratified, the TPP will have significant implications for a number of economic sectors across the Pacific. Agriculture, an industry with historically strong domestic constituencies and regulations, proved one of the more difficult sectors to navigate, particularly with respect to the dairy and sugar markets.
Here’s a look at the news coverage of how some of the major players’ agricultural interests fared:
Australia:
Australia began talks hoping to open markets for its abundant agricultural products. Japan provided such an opening as Japan is set to eliminate (gradually, in some cases) tariffs on Australian beef and horticultural products, and raise import quotas on dairy products and rice—a significant development. In previous bilateral negotiations with Australia, Japan had remained firm with its trading regulations for rice imports. Reportedly, if the TPP is ratified, Australian producers would have the opportunity to increase sales of these commodities in Japan.
However, Australian negotiators achieved mixed results with respect to sugar. The United States raised sugar quotas and removed tariffs in what was called one the most generous offers on this commodity since NAFTA, but the allowances are only marginal. The United States also offered a small increase in market access for Australian dairy, though Australian negotiators had hoped for more.
Canada:
Dairy, a large and influential industry in Canada, generated significant debate throughout the entirety of negotiations. Australia, the United States, and New Zealand—the world’s largest dairy exporter—requested that Canada lift quotas on imports, but apparently the final agreement did not include this term. Instead, Canada sought to maintain the strength of its domestic dairy industry by agreeing to only a modest increase in dairy importations. Campaigns for the Canadian national elections were underway as the TPP entered final talks, which may have limited the negotiators’ flexibility.
Japan:
The finalization of the TPP agreement reportedly represents a victory for Japanese Prime Minister Shinzo Abe’s planned structural reforms to jumpstart economic growth. Japan has made significant efforts to loosen barriers and expand market access for several commodities. However, other reports indicate some local farmers remain worried that an increase in imports will depress domestic prices and harm their businesses as imports increase.
Abe has endeavored to defuse tensions with the agricultural industry by creating a task force to aid Japanese farmers in the adjustment. Proponents of the deal say that agriculture won’t be affected to such a great degree, given that tariff reductions will occur gradually and they’ll be counteracted by the weakness of the yen—arguing weaker exchange rates incentivize exports. The government has also agreed to buy rice to support domestic farmers if needed.
United States:
The United States negotiated increased access to Japanese agricultural markets and others, while maintaining support for several crucial industries. In particular, it is reported that only small changes were made to trade regulations on sugar imports, allowing "a small amount of additional market access” for foreign competitors. In a market that already accounts for 42 percent of U.S. agricultural exports, many TPP supporters believe that demand for U.S. commodities abroad could expand along with sales, ushering in increased farm incomes and stronger commodity prices with ratification. Additionally, the agreement is designed to support science-based sanitary and phytosanitary standards for American agriculture, an advantage to the shrimp industry, for example.
U.S. Secretary of Agriculture Tom Vilsack endorsed the deal, and several U.S. agricultural associations have come out in support of the agreement , including the American Farm Bureau, the American Soybean Industry, the American Sugar Alliance, the U.S. Grain Council, the North American Meat Institute, and Western Growers—even if some are cautiously optimistic about the final language. Concern exists, though, that the deal will benefit corporations at the expense of family farmers if it removes protections for workers or price supports.
If ratified, supporters say the TPP has the potential to expand trade enormously across the Pacific and the United States will have succeeded in fostering stronger economic partnerships throughout the Pacific Rim. However, there are those who fear the economic gains will not fall equally and a number of hesitations remain. Critics worry, for example, that the deal would raise the potential for disease outbreaks if food safety inspections have been limited.
But for now, we wait for the concrete terms of agreement, and then for the long legislative debates ahead.
Editor's Note: The full text of the agreement is now public and can be viewed here.