What is in this article?:
- Trans-Pacific Partnership talks at critical point
- Reasons to pay attention
- U.S. agricultural groups have reasons to pay attention to the talks even if the immediate impacts are minimal. The first is the desire of other countries to join. The second reason is the potential to develop compatible regulatory systems.
Reasons to pay attention
U.S. agricultural groups have reasons to pay attention to the talks even if the immediate impacts are minimal. The first is the desire of other countries to join. As noted, Japan, Canada and Mexico have asked to join the talks. South Korea and China have expressed some interest, as has the Philippines and Costa Rica. Other Asian groups have had some interest in crafting FTAs for parts or all of Asia, but the TPP FTA is the only proposal with work in progress. If it does not move forward, another 5-10 years may go by before another opportunity develops.
The second reason is the potential to develop compatible regulatory systems. Sanitary and phyto-sanitary issues are often greater roadblocks to trade than traditional tariffs. A standard set of regulations for the TPP FTA based on sound science could be used as a template for other trade agreements. Australia and New Zealand with strong agricultural export industries would be good partners for establishing a regulatory framework.
Third, for an agreement to be “high standards” it would need to be a comprehensive one that covered all industries and all goods and services within industries. Too many FTAs have exempted certain politically sensitive agricultural products like poultry and dairy for Canada in NAFTA. The rules may not be the same for all products, but all must be part of the process of market opening.
Fourth, if labor and environmental issues could be resolved within the TPP FTA, they could also become a template for other agreements. Australia and New Zealand face many of the same labor and environmental issues as the U.S. Vietnam is a developing country with much more interest in economic growth and reducing unemployment and poverty. The other countries fit somewhere in between. Any agreement that would meet the diverse needs of the nine countries may have wide applicability to other FTAs.
Before becoming too enthralled with the progress on trade policy that can be made with the TPP FTA, the reality is that national political considerations of each country will continue to influences their positions. While terms “high standards” and “21st century” are often used as adjectives for the agreement, the outcomes will be far from real free trade. Tariffs may be phased out over ten years, which is good, but rules-of-origin, sanitary and phyto-sanitary issues, intellectual property rights, environmental issues and other limits to access will remain.
For example, some groups have made sugar trade a point of contention because it was not included in the U.S.-Australia FTA at the insistence of the U.S. Sugar trade between Australia and the U.S. continues to be managed under provisions of the WTO agreement. The USTR has taken the general position of not reopening arrangements agreed to in previous FTAs. This also applies to dairy products. Textiles and apparel rules-of-origin requirements have also been key issues.
The movement toward freer trade is very much a work-in-progress. While the current movement is too slow for many seeking new income opportunities or lower cost imported products, the movement since the General Agreement on Tariffs and Trade (GATT) was formed in 1947 has been substantial. The TPP FTA negotiations are another step down the road of improving standards of living through trade.
The agreement is a “single undertaking” in that no issue is final until all trade and trade-related areas have been addressed. Wrapping up all these issues by December of this year may be a stretch, but would be worth the effort.
Ross Korves is an Economic Policy Analyst with Truth About Trade and Technology