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1 1 (November 19, 2015)

handle is hein.crs/govcdus0001 and id is 1 raw text is: FF.ri E~$~ & November 19, 2015 TPP: Selected Commodity Impacts for U.S. Agriculture In evaluating the potential implications of the proposed Trans-Pacific Partnership (TPP) free-trade agreement for U.S. food and agriculture, an important consideration is that exports make a substantial contribution to the sector. Exports absorb about 20% of total farm output, thereby contributing materially to higher commodity prices and farm income. The positive ripple effects from farm trade to the sector extend beyond farmers and ranchers to rural communities; farm input industries that provide seed, fertilizer, and machinery; and commodity processors and food manufacturers with a stake in foreign markets. Exports may also contribute to higher input prices for food to the extent that additional foreign demand is not met by an increase in domestic supplies, although commodity costs amount to a fraction of overall retail food prices. Rising farm productivity, market-oriented U.S. farm policies, and the prospect of competing for faster-growing food markets in many developing countries contributed to broad support in U.S. agriculture for pursuing a TPP agreement. On initial read, it appears the TPP agreement reached in October 2015 would significantly improve market access for many U.S. food and agricultural products, potentially enhancing U.S. competitiveness in a number of markets. It also would provide TPP partners with greater access to U.S. product markets. TPP participants are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Congress would need to pass implementing legislation for the agreement to enter into force for the United States. The text below identifies three considerations around the TPP agreement that are particularly relevant for U.S. food and agricultural interests. This is followed by a partial snapshot of some of the higher-profile improvements in market access for agricultural products in the agreement. 1. An overarching consideration is that among significant TPP markets, the United States lacks free trade agreements (FTAs) with Japan, Vietnam, and Malaysia. As such, these countries likely offer the greatest potential for boosting U.S. farm and food exports via lower tariff, or expanded tariff rate quotas (TRQs). Under a TRQ, lower tariffs are applied to in-quota imports with higher rates for over-quota product. Japan is likely the leading market opportunity in the TPP due to its highly protected farm and food markets, large population, and high per capita gross domestic product. 2. Also significant is that potential key export expansion opportunities for U.S. food and agriculture interests, such as beef and pork to Japan and dairy products to Japan, Canada, and Vietnam, generally are to be phased in over a period of years, if not decades. For certain products in certain countries, such as Japan for beef, pork, and whey powder, safeguard measures allow for additional tariffs to be imposed if imports should exceed designated quantities. 3. If the United States chooses not to implement the TPP agreement, U.S. agricultural export competitors would have an opportunity to gain a competitive edge over U.S. exports of certain products to Japan and elsewhere. This could occur as a result of existing preferential tariff arrangements-such as Australia's FTA with Japan-or by ratifying an agreement similar to TPP without U.S. participation. Also, while the European Union is not party to the TPP, it is negotiating FTAs with Japan, Malaysia, and Vietnam that could enhance its competitive position in those markets. \-Spe ,,* Ax-es, Com it-m,-ak. The TPP agreement would affect market access for a broad range of agricultural commodities and food products. The list below is a selection of some of the notable changes included in the agreement. It is in no way comprehensive. * Beef. Japan ranks as the largest U.S. export market for beef and beef products, according to the U.S. Department of Agriculture (USDA). Under the TPP agreement, Japan would drop its current tariff on fresh, chilled, and frozen beef from 38.5% to 27.5% in year one, with subsequent annual reductions to 9% by year 16. Japan would lower tariffs on other beef products as well, while Vietnam would eliminate such tariffs over three to eight years. The United States, for its part, would eliminate tariffs on beef and beef products that range as high as 26.4% in no more than 15 years and in fewer than 10 years in most instances. * Pork: Japan, which also ranks as the leading market for U.S. pork and pork product exports, would immediately cut its tariff of 4.3% on fresh, chilled, and frozen pork cuts to 2.2%, phasing out the residual over nine years. A separate duty on pork cuts under Japan's gate price system, which acts as a minimum import price, would be lowered immediately to 125 yen per kilogram, from 482 yen now. This duty would then be cut to 70 yen in year five and subsequently lowered each year to reach 50 yen in year 10. A special U.S.-specific safeguard would allow Japan to temporarily increase the duty during this transition period if imports were to exceed a trigger level. Vietnam would eliminate tariffs that are as high as 34% on pork and pork products within 10 years, while the United States would immediately eliminate most such tariffs. Poultry: Canada would allow incremental increases in access to its highly protected poultry and egg markets over five years via new duty-free TRQs amounting to 2.3% of domestic production for eggs, 2.1% for chicken, 2% for turkey, and 1.5% for broiler hatching eggs. Thereafter, the quotas would be raised moderately each year, plateauing in year 19. Vietnamese tariffs on poultry of up to 40% would be eliminated within 13 years. U.S. tariffs of up to 18.6% ad valorem equivalent would be eliminated within 10 years. .O 'T mppm qq\ p\w gn'a', ggmm a 'S I 11LULANJILiN,

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