The 11 remaining countries in the Trans-Pacific Partnership this week announced they are moving ahead with the trade agreement after the U.S. abandoned it last winter.
The development isn’t a surprise, U.S. agricultural exporters say.
The countries participating in the newly renamed Comprehensive and Progressive Agreement for Trans-Pacific Partnership are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
“It’s definitely not a surprise,” said Joe Schuele, vice president of communications for the U.S. Meat Export Federation. “Japan has been particularly vocal about moving forward with the agreement. Several participants were fairly adamant that they wanted to move forward even after the United States withdrew.”
President Donald Trump withdrew from TPP in January.
The new deal has the potential to put U.S. exporters at a disadvantage in key markets such as Japan and Vietnam, Schuele said.
Japan is the largest market in value for U.S. beef and pork.
Australian beef already has a significant tariff advantage in Japan over any other supplier. If a modified TPP agreement proceeds, it would benefit Canadian, New Zealand and Mexican beef exporters in the Japanese market, he said.
Canada, Mexico and Chile are in the best position to supply pork to Japan, he said. Their existing economic agreements already give them some advantage in the market over U.S. exporters.
An agreement between Japan and the European Union reached over the summer is also a concern, Schuele said. The EU is the largest pork competitor for the U.S., he said.
“That agreement with the EU contains provisions similar to what were negotiated in the TPP,” he said.
Schuele said an economic dialogue with Japan is continuing, headed by Vice President Mike Pence and Japan’s Minister of Finance.
“Certainly there are a lot of calls for the U.S. to pursue a bilateral trade agreement with Japan, but that doesn’t appear to be atop Japan’s list of priorities right now,” he said. “We feel we have a very well-established and loyal customer base in Japan, but to maintain that, you still need to be priced competitively. It becomes more difficult to be priced competitively if you’re paying higher tariffs than everyone else.”
The tariff on U.S. frozen beef exports to Japan will increase from 38.5 percent to 50 percent by next March.
U.S. wheat exporters weren’t surprised by the 11-nation trade effort, either.
“We are unable to go on record commenting about a possible TPP-11 right now other than to say the possibility is an inevitable result of U.S. withdrawal from the agreement,” said Steve Mercer, vice president of communications for U.S. Wheat Associates.
In the past, U.S. Wheat has suggested the development of new free trade agreements rather than withdrawing from or renegotiating agreements.