Producer Groups React
to Release of USITC Report
U.S. International Trade Commission outlines impacts of TPP on U.S. economy in recent report.
On May 18 the U.S. International Trade Commission (USITC) released its report outlining the economic effects of the Trans-Pacific Partnership (TPP) on the U.S. economy. Producer groups’ responses to the report were largely positive, with a few groups showing skepticism toward TPP.
TPP negotiations were initiated in late 2008 and concluded last October. The agreement is a regional trade deal that includes the United States, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, which account for nearly 40% of global gross domestic product (GDP). The countries combined have more than 800 million consumers.
The National Cattlemen’s Beef Association (NCBA) embraced the report and TPP’s predicted benefit to the United States’ economy. NCBA President Tracy Brunner said the report confirms that TPP levels the playing field for U.S. beef exports and supports U.S. economic growth.
“Cattle producers rely on foreign markets and international trade to grow demand for high-quality U.S. beef,” said Brunner. “These markets add value to every head of cattle raised and fed in the United States. In order to compete with other global beef-producing nations, we need the level playing field provided through TPP. U.S. producers have already lost more than $140 million in sales into Japan alone since 2015 due to their preferential trade agreement with Australia.”
According to the report, the TPP agreement would increase annual U.S. GDP by $42.7 billion and expand U.S. employment by close to 128,000 full-time equivalents (FTE) by 2032 when the agreement is fully implemented. Moreover, the report estimates that 10 years after full implementation, those benefits would continue to grow, expanding U.S. GDP by $67 billion and employment by 174,000 FTE. For beef specifically, the Commission estimates that overall beef exports would be about $876 million higher once TPP is fully implemented and that it would have a moderate impact on U.S. beef imports.
Under the Japan-Australia Economic Partnership Agreement, Australian beef producers benefit from an 11% tax advantage on imports into that market. The USDA Economic Research Service estimates that without TPP, U.S. exports of beef to Japan will continue to decline by $105 million annually, or about 8%. The TPP would immediately reduce the tax on U.S. beef and give Japanese consumers a choice in the retail market unbiased by price.
The National Pork Producers Council (NPPC) was also decidedly positive in its reaction to the report and TPP’s impacts.
“The ITC report confirms what we’ve known about the benefits of an agreement that eliminates tariff and non-tariff barriers to our products,” said NPPC President John Weber. “Not only will the TPP level the playing field for U.S. exports and, in fact, expand them, but it has the potential to become even bigger. For all intents and purposes, the agreement has become the global vehicle for free trade.”
On May 19, the National Council of Farmer Cooperatives (NCFC) announced its support for the TPP agreement, as well.
“Exports continue to be an engine driving economic growth across America. For agriculture, the TPP offers tremendous opportunity to farmers and their co-ops to expand exports and generate additional economic activity across farm country,” said Chuck Conner, president and CEO of NCFC. “The agreement contains meaningful reductions in barriers erected by other countries to U.S. agricultural exports by lowering tariffs and working to ensure that sanitary and phytosanitary standards are based on science.”
Ag Secretary Tom Vilsack had only good things to say about the report, and TPP’s effects on the U.S. economy and trade position.
In a statement released May 18, Vilsack said, “Today’s ITC report echoes what every major reputable study on TPP has now found, from the Petersen Institute to the American Farm Bureau Foundation, which is that TPP will provide strong benefits for the U.S. agriculture sector, with agricultural output set to be $10 billion higher per year by 2032 than it would without the agreement. Agricultural exports drive 20% of U.S. farm income and trade is critical … to the continued growth of not only the sector, but to rural communities at large.”
The National Farmers Union (NFU) was less optimistic in response to the USITC report, claiming the economic assessment predicts “modest gains for the overall economy despite an increase in the United States’ already massive trade deficit.”
“These reports are often overstatedly positive, which is why it’s striking that the USITC’s optimistic results only project very modest economic gains for TPP. The Commission’s assessment of a gain of just 0.15% in U.S. GDP in the next 16 years, while increasing our massive trade deficit should raise serious alarms about the proposed benefits of this trade agreement,” said Roger Johnson, NFU president.
NFU suggests the report highlights how damaging TPP will be for the nation’s trade deficit. The trade deficit currently represents a 3% drag on GDP, negatively impacting the overall economy.
“A trade deal that neglects to provide improvements to our $531 billion trade imbalance is not a deal we can get behind,” Johnson explained. “In this case, USITC not only predicts that TPP will not address the trade deficit, but will likely increase the deficit by $21.7 billion. The data support that our producers are historically better off trading with countries we don’t have trade agreements with compared to the ones that we do.”
Editor’s Note: This story was prepared using releases from NCBA, USDA, NCFC, NFU and NPPC.