Japan Keeps Lid on Rice, U.S. on Sugar in Trans-Pacific Deal

  • U.S. Meat Industry ``Big Winner'' as Tariffs Eliminated
  • Canada Agrees to Open Access to Dairy, Poultry Market

Japan budged little on rice, the U.S. gave few concessions on sugar and Canada’s dairy system stayed intact in the Trans-Pacific Partnership agreement reached by trade ministers of 12 nations Monday, with the toughest agriculture issues resolved by tinkering.

The deal gives U.S. livestock producers new market access and simplifies inspection rules for fruits and vegetables while lowering taxes across farm goods, according to Darci Vetter, the U.S. Trade Representative’s chief agriculture negotiator. While not reaching the ideals hoped for by domestic commodity groups, American agriculture benefits more than enough to line up behind the deal, Vetter said.

“The whole point of trade is that not every country’s responsibilities are the same. Not everyone is focused on the same products,” Vetter said in an interview before the final deal was announced. “We have some wins in here.”

Negotiators in Atlanta wrapped up final agreements on agriculture, autos, drug patents and other thorny issues that have held up the TPP, a top priority of U.S. President Barack Obama. The deal includes nations that compose 40 percent of the world economy and create a regional trade bloc countering China’s growing influence in Asia.

U.S. farm exports topped $150 billion in 2014 and account for more than one-fifth of the country’s agriculture production, according to government data. TPP will boost sales by “billions,” Vetter said, declining to make a specific estimate.

Rice, Sugar

Tariffs and other barriers to farm goods, including rice, sugar and dairy, were among the final snarls that caused earlier talks in Hawaii to break off in July. U.S. negotiators touted agricultural opportunities they’re gaining in growing Asian markets, where reductions in tariffs on U.S. goods would make products more competitive with Australia, New Zealand and other competitors, Vetter said.

“Our meat industry is a big winner,” Vetter said, with pork duties going away in Vietnam and Japan capping tariffs on the meat at 50 yen per kilogram and making it easier for U.S. shippers such as Tyson Foods Inc. to target specific meat cuts for the Japanese markets.

‘Enormous opportunities’

The Trans-Pacific Partnership is a “major win” and will “reduce tariffs and level the playing field for U.S. beef exports,” National Cattlemen’s Beef Association President Philip Ellis said in an e-mailed statement. The accord is also expected to provide “enormous new market opportunities” for U.S. pork, according to an e-mailed statement from the National Pork Producers Council.

Pork was one of Japan’s top-priority agricultural commodities heading into the TPP, along with beef, dairy, sugar, rice and other grains. On rice, Japan is establishing a new quota of 50,000 tons of U.S. imports, which will rise to 70,000 over 13 years, along with potential new opportunities for increased U.S. sales within quotas already created through the World Trade Organization.

Less Than Hoped

The quota was less than that hoped for by rice exporters in the U.S., the fifth-leading shipper of the grain after Thailand, India, Vietnam and Pakistan.

Japan, where the grain has been culturally and economically important for millennia, imports almost none of its supply, thanks to high tariffs supported by JA-Zenchu, the nation’s union of farmer cooperatives.

While not as important culturally as rice to Japan, U.S. sugar access was another obstacle, with Australia wanting the U.S. to loosen a quota system that protects its own industry and protections that date to the Great Depression.

Under TPP, the U.S. is establishing a new quota for Australia, with an option to raise that allotment in years when the domestic import need is greater, Vetter said.

“We’re providing Australia with the same upfront quota as other nations,” Vetter said.

Sugar Shortfall

U.S. sugar producers are “cautiously optimistic” about the implications, saying it is important to farmers and taxpayers that the trade pact not threaten the country’s policy, the American Sugar Alliance said in a statement. Other groups, including the Sweetener Users Association, said the U.S. needs increased access to imports as the country is facing a shortfall in sugar that exceeds the 65,000 metric tons Australia is allowed to import.

“We need more sugar than provided by the agreement,” according to a statement from the Sweetener Users Association, which represents companies that use sweeteners.

Dairy was the last major area to be resolved. Exporters Australia and New Zealand had called for greater access to the U.S. market, though the biggest criticisms were reserved for Canada, where a system of tariffs and supply management has insulated the country’s 12,000 dairy farmers from the rest of the world.

Dairy has emerged as an emotional issue in Canada’s nationwide elections to be held later this month. Tractors converged on Ottawa, the nation’s capital, earlier this week as farmers pressured the government to reject any TPP agreement.

One of the final pieces of the deal to come together involved Canada’s unique protections against imported dairy goods.

Dairy Duel

In the end, Canada agreed to open -- over five years -- foreign quotas for 3.3 percent of its dairy market, 2.3 percent of its egg market, 2.1 percent of its chicken market, 2 percent of its turkey market and 1.5 percent of its broiler hatching eggs market.

“We obviously would have preferred that no additional market access be conceded in the dairy sector,” Dairy Farmers of Canada President Wally Smith said in an e-mail. “However, we recognize that our government fought hard against other countries’ demands, and have lessened the burden by announcing mitigation measures and what seems to be a fair compensation package.”

For Related News and Information:
Pacific-Rim Nations Led by U.S. Agree to Historic Trade Deal
Trans-Pacific Trade Deal Would Be Largest Since Nafta: BI Basics
Pacific Trade Deal Strengthens Obama’s Hand in Asia Strategy
Top Stories:TOP
Stories about trade and agriculture TNI TRD AGRI

Before it's here, it's on the Bloomberg Terminal. LEARN MORE