AMERICAN farmers – a major part of Donald Trump’s political base – are increasingly concerned about the eccentric US President’s anti free-trade agreement stance.
Trump had expected the Trans-Pacific Partnership to collapse when he quit the huge free-trade group last January, but now the 11 remaining countries are going ahead, and American farmers are getting buyers’ remorse.
US Meat Export Federation economist Erin Borror says the new TPP – minus the US – will create significant tariff rate advantages for competitors of American beef and pork.
Borror says Australia, Mexico and Chile already have free trade agreements with Japan and the TPP will provide even more tariff relief for their beef. It will also lower tariff rates on Japan’s imports of Canadian and New Zealand beef.
Japan’s quarterly beef import safeguards, for countries not having trade agreements, will shift to annual safeguards for beef imports from TPP countries, making them less likely to be triggered.
Under those safeguards, the tariff on US, Canadian and New Zealand beef was recently increased from 38.5 per cent to 50 per cent, where it will remain through next March 31.
TPP will give tariff relief for Canadian pork – America’s largest competitor in Japan’s imported chilled pork market. Pork from Mexico and Chile will also make market access gains beyond their current economic partnership agreements with Japan.
But Borror says the biggest breakthrough in the TPP’s pork provisions is Japan’s gradual elimination of tariffs on processed pork products – something Japan has never done before.
She says the European Union and Japan are expected to finalise a trade agreement in the next few months, which includes similar terms to TPP.
This will leave the US as the only major pork supplier to Japan without a trade agreement.
Japan is the largest export market for US beef and it pays higher tariffs in Japan than any other significant market.
“We see Australia, Mexico, and Chile already benefiting from lower tariffs through their respective partnership agreements with Japan,” Borror says.
Farmers fears are heightened by the stalemate in renegotiating the North American Free Trade Agreement, which Trump demanded under the threat of quitting the pact he didn’t get his way.
After five rounds of talks, US Trade Representative Robert Lighthizer says he’s concerned about the lack of headway.