Partnership seeks to ease trade agreements

Feb 17, 2012

American ranchers both big and small stand to benefit from the new Trans-Pacific Partnership (TPP). The Pacific-countries trade agreement aims to reduce barriers to trade and integrate companies of all sizes into the global market. If the TPP succeeds in even some of its goals, American ranchers could look to Asian and Australian markets in addition to their local markets to sell their beef.

TPP is a newly forged trade agreement between nine Pacific countries: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the U.S. The partnership was created November 2011 following two years of organizing and four years of planning talks, and seeks to streamline trade agreements among partner countries.

TPP’s U.S. website boasts the partnership will address trade issues not covered in other international trade agreements. Among these “horizontal” cross-cutting issues TPP plans to tackle are supply chains, regulatory systems, getting small- and medium-sized enterprises into international trade, and aiding the developmental needs of growing member economies.

Phil Seng, president and CEO of the U.S. Meat Export Federation, was pleased by the partnership’s formation.

“The TPP is intended to touch all elements of trade and take trade protections to zero. Anything that will mitigate trade protections in export markets is something we wholeheartedly embrace.”

Combined trade agreements with current TPP member countries were valued at $89.2 billion in 2010. Beef exports to just three of the eight TPP export markets available to the U.S. (Australia, New Zealand, and Vietnam; no data found for other TPP member countries) alone exceeded $198 million in value in 2011.

Proponents claim that, if taken as an individual trading entity, TPP partner countries would represent the U.S.’ fourth largest export market behind Canada, Mexico and China. The possibility exists that that position could improve as more Pacific nations seek entrance into TPP.

Of particular interest is the possibility of more Asia-Pacific Economic Cooperation (APEC) countries—these being almost every country with a Pacific coastline— joining in the TPP. U.S. export to all non-TPP APEC countries as of 2009 was valued at over $397 billion. The possibility of these countries joining the TPP, coupled with the program’s goals of extremely streamlined trade agreements between member countries, could open up enormous export doors to American workers.

In 2009, total U.S. exports globally were valued at $943 billion. Of that, a little over 10 percent was agricultural at $96 billion. In 2010, total exports climbed to just over $1 trillion, with ag exports again representing just over 10 percent at $108 billion. Last year, the total export value jumped to $1.2 trillion with 11 percent of it—$137 billion—being agricultural, and of that, beef exports represented $5.4 billion.

The increased demand for diets with more highquality protein has been well-documented in the growing middle classes of developing Asian countries. This makes the opportunities for growth in the beef export market particularly bright for ranchers as more APEC countries seek membership in TPP.

Despite the rosy possibilities of the future, there are some roadblocks TPP must contend with. Seng pointed out that getting into markets isn’t the only hurdle to consider. Numerous other countries try to export their beef around the globe, so strategic promotional campaigns are needed.

“Getting a market open is the easy part, but winning the hearts—or stomachs, if you will—is harder.”

Another trade issue that has been recently publicized is the widespread ban of muscle-growth additive ractopamine in many Asian countries. The U.S. and Canada are among the small minority of countries (from 24 to 28, depending on source) which allow the use of ractopamine as a supplement to beef cattle.

Ractopamine use is currently banned in 160 countries, of which China and its closely associated countries are the most pressing to TPP concerns. U.S. beef and pork exports to China and Taiwan are regularly stopped at the boarder if residues of the supplement are detected and fines are issued. Both countries have a zero-tolerance policy against the supplement and its residues.

Researchers from both China and Taiwan say ractopamine has damaging, even “poisoning” effects on humans who consume meat containing residues. Researchers in the U.S. and Canada have come to no such conclusions and the Codex Alimentarius Commission—an international food safety organization which works in cooperation with the United Nations and the World Health Organization—called ractopamine safe and a nonpriority in 2009, though they eventually set maximum residue levels for it in beef cattle and swine.

When asked about the issue of ractopamine bans, Seng commented on general trade agreements. “All trade countries are supposed to abide by international standards and remove non-scientific barriers to trade. If sanitary issues are being used as a barrier to trade, then that would need to be resolved.”

Taiwan has been vocal about its interest in joining TPP, but the issue of U.S. beef and pork imports has spurred public protest. Taiwanese officials argue that Taiwan’s import of U.S. beef should not be a precondition of Taiwan’s admission to TPP. Many Taiwanese hog and cattle farmers have threatened to protest if ractopamine is okayed in their country, or in China, from fear U.S. meat imports would hurt their local markets.

Regardless of existing trade squabbles with potential future TPP member countries, U.S. beef producers stand to gain a lot by the partnership. There are few down sides to increased ease in export and the potential for more export markets for U.S. beef.

“As domestic demand for beef declines, more emphasis on international trade is well warranted,” Seng reported. “I think the outlook is very bright.” — Kerry Halladay, WLJ Editor