DES MOINES, Iowa – It’s no stretch to call the Trans-Pacific Partnership controversial. So why are agricultural groups clamoring to get it signed?
While controversial for the secrecy of its negotiations and for a new dispute settlement process that some say undermines U.S. sovereignty, the Trans-Pacific Partnership is viewed by the Obama administration as a key trade deal supporting middle-class jobs. As it relates to exports, TPP seeks to remove all multilateral import taxes or tariffs on trade between the twelve Pacific Rim nations at the neogtiating table, which include the U.S.
On average, the U.S. applies tariffs of just 1.4 percent on imported products. Fully 70 percent of products imported to the U.S. don’t have any tariffs applied to them at all. But exports of American manufactured goods can face tariffs of up to 100 percent when they’re bound for some Asian-Pacific markets in the TPP region. For farm exports, that figure can be as high as 700 percent; seven times the value of the product, just to import it.
Tariffs that high currently only affect exports of rice. But other Iowa products end up facing massive tariffs; last year American farmers exported just under $11.5 billion worth of corn and corn products, with just over half of those headed to TPP countries, where they face tariffs between five percent in Vietnam and 87 percent in Japan.
Soybeans have it a little easier; almost 20 percent of last year’s $30 billion soybean and soybean product export business took place in TPP countries, with tariffs up to 30 percent.
Pork has it a little rougher. TPP countries accounted for 70 percent of last year’s roughly $6.5 billion in pork and pork product exports. In Vietnam, U.S. pork gets slapped with a 25 percent tariff. In Japan, it can get as high as 300 percent, depending on the product.
In all, if Congress passes TPP and does away with tariffs, USDA’s Economic Research Service estimates an increase in ag trade among TPP countries to the tune of eight and a half billion dollars, with the lion’s share of two point eight billion dollars in increases supplied by the U.S.
To hear more about why agriculture is invested in the Trans-Pacific Partnership, click the audio player above this story.