(Adds comment from deputy U.S. trade representative, eighth
By Krista Hughes
WASHINGTON, June 10 U.S. farmers are in an
uproar over signs Japan will maintain some barriers to
agricultural exports under a Pacific trade pact, which threatens
to unravel a deal that is central to U.S. efforts to retain
economic and security influence in the region.
Four years into Trans-Pacific Partnership (TPP) talks, U.S.
negotiators are fighting to balance the goal of total tariff
elimination with the sensitivities of Japanese and American
farmers and the needs of other trading partners.
Central to President Barack Obama's strategic shift toward
Asia, the TPP would connect a dozen economies by cutting trade
barriers and harmonizing standards in a deal covering two-fifths
of the world economy and a third of global trade.
After an April summit between Obama and Japanese Prime
Minister Shinzo Abe, a compromise seems likely to allow Tokyo
to keep some protection for goods like beef, sugar, dairy or
wheat, judging by a change in tone from U.S. officials in recent
weeks to talk about tariff elimination "to the maximum extent
This contrasts with the original goal, upsetting American
farmers. Dairy farmers have threatened to withhold their support
for the deal if the markets are not opened in a meaningful way,
and other farm groups have called for Japan to be excluded from
the trade deal.
"We are not going to allow a bad deal with Japan to go
forward," said Nick Giordano, vice president of the National
Pork Producers Council, which represents pig farmers. "It's
going to invite other countries in the TPP to scale back what
they are willing to give the United States."
Past U.S. trade deals have also fallen short of total tariff
elimination. But the extent of the concessions is crucial,
especially in winning support of the influential U.S. farm
lobby, which could scupper TPP in Congress.
Acting Deputy United States Trade Representative Wendy
Cutler said U.S. negotiators were working with Japan to achieve
the maximum possible access for U.S. farm exports. "We are
really focused on concluding TPP with Japan. That is why we are
spending so much time with them," Cutler said on Tuesday in
response to a question at a Center for Strategic and
International Studies event.
A deal that expands U.S. farm exports and is backed by
farmers could help Obama win over skeptical Democratic lawmakers
who associate trade deals with lost jobs. Farm lobby support is
also crucial for Republicans, who are generally pro-trade but
would likely reject a deal opposed by farmers.
A deal with broad agricultural exemptions would be "dead on
arrival in the House of Representatives," said Republican Aaron
Schock, a member of the congressional trade panel which has
called a hearing on agriculture trade for Wednesday. He noted
that 60 seats in the House represent agriculture-dominated
The United States is the world's biggest farm exporter. It
greatly outstrips the next two biggest farm exporters in the
TPP, with exports more than three times greater than Canada and
five times greater than Australia.
U.S. Trade Representative Michael Froman insists a final
Japan deal will be comprehensive and give American farmers
better access to Japanese markets.
"I'm confident that TPP will cover the full range of
Japanese agricultural products," he told Reuters. "Our overall
goal for TPP is to deliver market access gains across the board,
including through tariff elimination, that can be maximized by
American farmers and ranchers."
How that would happen is unclear. There are many variables,
including which goods will have no tariffs, how quickly tariffs
will be phased out and which goods might retain tariffs.
"You can get a deal that covers 95 percent of tariff lines
but it's not a good deal if the 5 percent of tariff lines that
it leaves out are the ones you are most interested in," a former
U.S. agriculture trade negotiator said.
Many see the 2012 U.S.-Korea trade deal as a benchmark. It
excluded rice and kept tariffs on goods such as milk powder in
exchange for a bigger duty-free import quota.
"We didn't want to throw that agreement away because it did
not eliminate every single tariff line. We are pragmatic," said
Jaime Castaneda, senior vice president of the U.S. Dairy Export
But if Washington fails to pry open Japan's markets
sufficiently, experts fear it will have a domino effect.
A "TPP-lite" would give trading partners few incentives to
accept rules on intellectual property and protection for foreign
investors, an important element for U.S. companies.
"We cannot sign off 21st-century rules and ignore
20th-century unresolved market access issues, of which deep
pockets of high protection in agriculture ... are unaddressed,"
New Zealand Trade Minister Tim Groser said on Friday, warning
the TPP could still stumble.
With talks splintered into bilateral negotiations, trading
partners say they fear there will be an uneven playing field at
the end, undermining their ability to sell the deal at home.
Many deals are interdependent.
The United States wants better access to Japan and Canada
before allowing New Zealand dairy farmers to sell more in
New Zealand, which exports 95 percent of its milk but
accounts for 2 percent of global supply, might settle for a good
deal from Japan and Canada and not then press the United States.
To win concessions from Canada and Japan, the United States may
have to open its sugar market to Australia.
"It's going to be a process of give and take," said
Representative Ron Kind, leader of the pro-trade New Democrat
Coalition. "My suspicion is that we are not going to be dropping
all the tariffs on our side so it would be a bit disingenuous
for us to insist on that for other countries."
(Editing by Jason Szep, Leslie Adler and Dan Grebler)