A summit with leaders of the member states of the Trans-Pacific Strategic Economic Partnership Agreement (TPP). Pictured, from left, are Naoto Kan (Japan), Nguy?n Minh Tri?t (Vietnam), Julia Gillard (Australia), Sebastián Piñera (Chile), Lee Hsien Loong (Singapore), Barack Obama (United States), John Key (New Zealand), Hassanal Bolkiah (Brunei), Alan García (Peru), and Muhyiddin Yassin (Malaysia).
Photo: Government of Chile
The negotiations related to a Trans-Pacific Partnership (TPP) have been ongoing for some time. Most analysts agree that U.S. agriculture would benefit from a trade agreement with the 12 or so Pacific region countries. However, agriculture and dairy are just a small piece of the puzzle. And, in any negotiation, the devil is in the details.
For example, how would the TPP affect the auto sector? After all, the financial aid given to that sector during the most recent recession was done on the principle that the collective auto sector employed roughly 1 in 10 Americans.
With that question top of mind, the American auto sector could realize $7.8 billion in additional sales in the year 2025 while there would be $30.8 billion more of imports in the same category. That was according to a study published by the Peterson Institute for International Economics. Could the U.S. auto industry live with a $23 billion gap?
That same study found agriculture could gain $2.4 billion more in exports and only see $0.5 billion more in imports. Simple math would indicate that agriculture proponents would favor the TPP ($1.9 billion gain), while the much larger auto sector with a well-established lobby would want to be sure its concerns are addressed in any new trade pact ($23 billion projected shortfall).
While we hope this doesn’t play out, every trade negotiation involves bargaining, a give and take if you will. In the case of dairy, Canada and Japan have very entrenched quota systems that have shielded their dairy sectors from the outside world. If the TPP doesn’t address those matters, any deal could be a net loser for U.S. dairy.
And while our elected officials are keeping dairy considerations in the forefront these days, we must not be complacent. T
his trade pact is a long way from being finalized, and we cannot afford to have dairy become a bargaining casualty.
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(c) Hoard's Dairyman Intel 2015
April 13, 2015
