The U.S. Grains Council welcomed the announcement that both Mexico and Canada will participate in the Trans-Pacific Partnership (TPP) negotiations. The inclusion of the United States’ current North American Free Trade Agreement partners will build on the successful expansion of trade under the existing agreement and create substantially greater opportunities for economic growth, new jobs and increases in trade and investment flows in the future.
“Mexico and Canada are already top customers for U.S. corn, sorghum and barley,” said Wendell Shauman, USGC chairman. “We are already strong trade partners, and it makes good sense for all of us to extend that partnership across the Pacific.”
With the inclusion of both countries in the TPP agreement, U.S. producers and grain exporters and the thousands of Americans they employ stand to benefit greatly from stronger North American representation in the talks. Inclusion of Canada and Mexico will also add economic geopolitical strength to the TPP and increase other countries’ interest in joining the TPP negotiation.
As the third-largest economy in the world and the fourth-largest trading partner of the United States, Japan’s entry into the TPP negotiations would considerably increase the economic significance of the proposed agreement.
“Like Canada and Mexico, Japan has been a long-standing and loyal customer for U.S. grains and co-products, and we believe their participation will provide mutual long-term economic benefits,” Shauman said.
As TPP negotiations continue, there is also work being done to normalize trade relations with Russia, which could also have numerous benefits for agriculture. Wayne Wood, president of Michigan Farm Bureau, recently testified on behalf of American Farm Bureau Federation before the House Committee on Ways and Means concerning the importance of permanent normal trade relations (PNTR) with Russia.
“PNTR makes permanent the trade status the U.S. has extended to Russia on an annual basis since 1992,” Wood said. “It recognizes Russia’s joining the World Trade Organization, which will provide our farmers and ranchers with more certain and predictable market access.”
Russia’s commitment to adhering to WTO provisions on sanitary and phytosanitary measures in particular will benefit U.S. farmers by limiting the country’s ability to impose arbitrary measures that have impeded trade in the past. In his testimony, Wood explained that exports of U.S. farm goods to Russia are likely to increase substantially following congressional approval of PNTR and the country’s accession to the WTO. U.S. sales of beef, poultry, pork, apples, cheeses, soybeans and soybean products are all expected to grow due to improved market access.
A Senate bill that was recently introduced would graduate Russia from the Jackson-Vanik Amendment to the Trade Act of 1974, and authorize President Barack Obama to establish PNTR with the world’s sixth largest economy. Other agricultural groups, including the American Soybean Association, also strongly support passage of the bipartisan bill introduced by Senators Max Baucus (D-Mont.), John Kerry (D-Mass.), John McCain (R-Ariz.) and John Thune (R-S.D.), which enables the U.S. to take advantage of the many market opening commitments that form Russia’s accession package to the WTO, to which the country was formally invited in late 2011.
Russia is home to more than 140 million consumers and a fast-growing economy. As part of its accession to the WTO, Russia will be obligated to bind its agricultural tariffs, adding more predictability to the trading relationship and opening export opportunities for the U.S. agricultural industry. WTO membership will also require Russia to adhere to internationally-recognized scientific standards when regulating meat imports, thereby ensuring greater predictability for U.S. exporters seeking to supply the Russian consumer market.
The establishment of PNTR with Russia is different from a free trade agreement, in that the move will not require the U.S. to provide any market access benefits, lower any U.S. tariffs, or make other changes to our trade laws as a result of Russia’s WTO accession.