An Urban's Rural View

As the Trans-Pacific Partnership trade talks continue to produce headlines, Agriculture Secretary Tom Vilsack has once again declared that while he favors a "good" TPP deal, no deal would be better than a bad one. So far, though, U.S. negotiators haven't defined "good" and "bad."

The TPP talks are supposed to be "ambitious." A perfect deal, then, would end all tariffs and non-tariff barriers among the 12 TPP nations. No one has said so but most likely a substantial reduction in tariffs -- say, to low single digits in percentage terms -- would still qualify as "good."

What if, without going that low, a nation -- for example, Japan, since that's the country the U.S. says is the stumbling block in the talks -- cut its ag tariffs in half? Or even to low double digits or high single digits? Would the secretary consider that a good deal for ag?

This week's headlines suggest these questions are no longer speculative. As I mentioned in my most recent blog post (http://tiny.cc/…), Japan had been trying to exclude its rice, beef, pork, wheat, dairy and sugar markets from the TPP deal. Now Japan has indicated a willingness to negotiate, at least about beef.

In a separate deal with one of the TPP countries, Australia, the Japanese have agreed to a 50% cut in their tariff on frozen beef, to 19.5%. They clearly hoped to pressure the U.S. to accept a similar tariff level in the TPP. No dice, said U.S. Trade Representative Michael Froman: The U.S. seeks "a higher level of ambition" from a TPP deal.

What about 10%? According to Reuters (http://tiny.cc/…), a Japanese newspaper reported that Japan "was considering lowering its beef tariff to below 10% but wants to be able to restore its higher levy if beef imports increase by even a small amount."

Would that be a good deal? If the tariff can rise again at the slightest sign of increased imports, probably not. But what if Japan agreed to a 10% tariff without that condition? Might it then depend on how many years the Japanese wanted to take before getting down to 10%? And what's on offer for the other ag sectors Japan was trying to exclude?

So over to Ambassador Froman and Secretary Vilsack: Are you going to shoot this trial balloon down? Or is it getting close to "good" territory?

The same Japanese newspaper article said Froman "appeared to have abandoned" his insistence that tariffs be scrapped altogether. That might be true or it might be just premature, but it's not big news. A perfect deal was never in the cards.

But we're inching toward the point where our negotiators will have to decide if they've gotten enough "ambition" out of Japan. They'll have to calculate whether there's a chance the Japanese will move close enough to our bottom line, wherever they've drawn that line in their own minds, for a deal to happen.

Watch for U.S. ag groups, which have already warned that they won't support a bad deal, to step up the pressure for the best possible definition of "good."

Urban Lehner can be reached at urbanity@hotmail.com

(SK)

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