TPP revival could hit US wheat exports: US wheat lobbyists

The revival of a Pacific-wide free trade deal that encompasses most major economies in the Pacific will hit US wheat exporters hard as it would slash the cost of wheat imports into Japan by $65 per tonne, according to US wheat lobby groups.

On Wednesday, Australia’s trade minister, Steve Ciobo, said that the 11 remaining countries will sign a new agreement in Chile on March 8, which could remove almost all import tariffs on goods traded.

Speaking in Davos, Switzerland Prime Minister Trudeau of Canada, which stands to benefit from the agreement, said it was “the right deal.”

However, the announcement that an agreement would be reached that would see major wheat importer Japan enter a free trade area with major wheat exporters Canada and Australia has irked US lobby groups.

Japan imports about 3 million mt of US wheat every year, roughly half of its total needs, and after full implentation of the agreement, Japan’s import tariffs on Canadian and Australian wheat would drop by about $65/mt. 

“That would put U.S. wheat producers at a total price disadvantage of more than $200 million per year from TPP alone,” said Ben Conner, director of policy at the US Wheat Associates.

US farming lobby groups have long-campaigned against scrapping TPP, calling President Trump’s decision to withdraw from the agreement as “shortsighted and unnecessary”.

However, in his first week in charge, President Trump pulled the US out of the talks, which would have created a tariff free area with Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Instead he cited preference for bilateral trade deals as opposed to multilateral ones, a promise that the National Association of Wheat Growers has asked the President to deliver upon.

“If nothing else, this announcement should serve as a rallying cry for farmers, ranchers and dairy producers calling for the new trade deals we were promised when the President walked away from TPP,” said Gordon Stoner, president of the association.

“The heat needs to be turned up on the administration and on trade negotiations with Japan. An already stressed agriculture sector needs the benefit of free and fair trade now,” he said.

Mid-term

President Trump is currently in a round of negotiations seeking to change the North America Free Trade Agreement (Nafta) – a free trade area between the US, Canada and Mexico.

On Wednesday, Prime Minister Trudeau took part in a roundtable debate in Switzerland with key industry figures to discuss the benefit of Nafta, including the chairman and CEO of Cargill and president and CEO of Tyson Foods.

The decision to push ahead on TPP without the US comes 10 months before mid-term elections in the United States, where the Republicans are at risk of losing their majority in the US Senate.

President Trump won more than 60% of the rural vote in the 2016 presidential election, with key agricultural states Iowa, Ohio and Indiana backing him.