Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Friday 06/06/14

NPPC Incensed Over Japan's TPP Position

DES MOINES (DTN) -- Pork producers at the World Pork Expo made it clear this week they aren't going to budge when it comes to getting better market access to Japan as part of the Trans Pacific Partnership talks.

"We must not be robbed billions in future sales," said Randy Spronk immediate past president of NPPC and chairman of the group's trade committee.

NPPC signed a letter in late May with the International Dairy Foods Association, the National Association of Wheat Growers, the USA Rice Federation and the U.S. Wheat Association calling on the Obama administration to drop Japan from the trade talks unless Japan puts a better deal on the table that lifts barriers for pork, rice, wheat and dairy products.

The Trans Pacific Partnership is a 12-country trade deal that includes the United States, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Like NPPC, dairy groups also issued a news release earlier this week declaring their frustration with Japan's lack of market access in the trade talks as well.

NPPC leaders are particularly irked. As the top export product to Japan, the pork industry took the lead in getting other agricultural groups to encourage the U.S. to bring Japan into the TPP talks. Other sectors of the U.S. economy, such as auto manufacturers, largely opposed bringing Japan into the talks.

"The exemptions from tariff elimination they want are almost three times than the 17 FTA's the U.S. has implemented this century," said Nick Giordano, vice president of international affairs for the National Pork Producers Council.

Agriculture is always sensitive in trade talks, Giordano noted. He cited battles over the North American Free Trade Agreement with Mexico over pork. Mexican producers believed they would be run out of business by cheap U.S. pork.

"They are harvesting as many hogs in Mexico as they did before NAFTA was implemented so the sky didn't fall," Giordano said.

Last year, the U.S. exported $1.9 billion in pork products to Japan, according to USDA. Exports to Japan are up 8% from a year ago, but sales are growing in a more rapid pace in Mexico, China and South Korea.

Japan's main import barrier is a "gate price" set up in 1995. The gate price requires exporters to send over only higher-value cuts because if they send over products lower than the gate price then they must pay the difference. Thus, almost all products sent to Japan are above the gate price. They still pay a 4.3% tariff on all of those products as well.

NPPC's position is Japan should move the gate price down to eventual eliminating it altogether. That would allow the U.S. to send a broader variety of pork products to Japan. Giordano noted South Korea opened its market to the U.S. despite emotional resistance by farmers. "Yet, the Korean government did the right thing. They eliminated tariffs on virtually every product from the United States. That's what Japan doesn't need to do."

Pork producers are communicating to Congress. "We can't support TPP with the deal on the table from Japan as it stands now," Giordano said. "No way."

Giordano became passionate on NPPC's position. "We are not budging," he said. "We are not giving special treatment on pork, period."

Giordano noted that if Japan is successful in exempting products from tariff elimination, then other trading partners would ask for similar treatment. It could spill over into the trade deal with Europe as well. The TPP would become "TPP-lite" if Japan is allowed to exclude so many agricultural products.

"If you do have a final TPP agreement, it's going to be TPP-lite," he said. "It is not going to be the high-standard 21st Century agreement that was initially envisioned by the ministers when they launched the negotiations."

Chris Clayton can be reached at chris.clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

Posted at 10:50AM CDT 06/06/14 by Chris Clayton
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