Think produce growers could use a couple billion extra dollars? Not that there’s any such thing as an extra dollar in farming. But the American Farm Bureau Federation projects that America’s return to the revised and reinvented Trans-Pacific Partnership (now known as the Comprehensive and Progressive Trans-Pacific Partnership) could bring just that.
With a Chinese trade war looming that promises to be exceptionally harsh on agriculture, and the uncertainty surrounding renegotiation of the North American Free Trade Agreement (NAFTA), the possibility of rejoining the Pacific alliance President Trump withdrew from in the first week of his presidency could boost American ag revenues by some $4.4 billion annually, the Farm Bureau said this week.
The Trans-Pacific Partnership was initally a 12-country deal, finalized in February 2016 but never ratified by the U.S. before Trump withdrew in January 2017. The remaining 11 parties — Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam — forged ahead with a program to eliminate tariffs and other barriers to exchange of agricultural products between member nations.
The Farm Bureau said the resulting increase in trade would have boosted the full spectrum of American agricultural products: fruits and nuts, vegetables, soybeans, beef, pork, poultry, dairy, rice, cotton and even processed food products.
CPTPP Spot Could Boost Net Farm Income By $4.4 Billion
Farm Bureau projections suggest that TPP would have boosted annual net farm income by $4.4 billion — $2.7 billion of that to the crop sector, including fruits and vegetables — driven by an increase of direct U.S. agricultural exports of $5.3 billion per year upon full implementation of the agreement. It is estimated that increased market prospects for U.S. farmers would have added more than 40,100 jobs to the U.S. economy.
And still might. The revised Comprehensive and Progressive Trans-Pacific Partnership is expected to be finalized later this spring. America is once again in the picture. Three weeks ago Trump reversed his position on the withdrawal. Then, on April 18, he switched positions again, saying he did “not like the deal.”
But behind the scenes, other players in the partnership — most notably Japan — are publicly and privately encouraging America’s return.
Power Bloc To Counter China’s Resources
Why would Trump consider a return to a partnership he once called “the worst deal imaginable”? In a word, China. Were the U.S. to join the other 11 countries in the CPTPP in a trade alliance, the result would be a power bloc that would yield a significant counterweight to China’s growing presence in the trade world. Without U.S. weight, the remaining CPTPP members simply don’t have the clout to mount a challenge to China.
“Ratification of the CPTPP is expected this spring, and the trade partners could consider adding new members not long after,” said Ernie Birchmeier of the Michigan Farm Bureau. “There are few differences between the TPP the U.S. signed and the CPTPP, so if the U.S. were to become a member, it would be viewed as a significant win for U.S. agriculture. It’s critical to remember that CPTPP is a multi-lateral agreement intended to create high-quality rules and market access for all of its members.”
Other member nations are already negotiating and implementing bilateral trade agreements without waiting for the U.S. to return to the table.
“U.S. failure to join CPTPP will not see our trade situation stay the same, but will actually lead to additional declines in net exports and desperately needed market share in important markets,” Birchmeier said.
If the U.S. were to sign on to CPTPP, the Farm Bureau projects that in addition to the $2.7 billion crop sector growth, beef and pork would both see additional exports of about $1 billion annually, livestock receipts would soar by $5.8 billion, and U.S. net farm income would rise by $4.4 billion annually.