Milling & Baking News - January 24, 2012 - 28

Washington 

The Trans-Paciﬁc Partnership and agriculture
BY ROBBIN S. JOHNSON

With the Doha Round trade negotiations now more officially shelved, attention on the agricultural trade front is shifting in new directions. For the World Trade Organization, it likely will mean thinking harder about linking trade liberalization to food security, a suggestion made here several times over the past few years. For the Obama administration, however, it likely means more focus on an initiative called the Trans-Pacific Partnership (T.P.P.) and its potential for job-creating economic growth. An Asia-Pacific focus for U.S. trade policy actually goes back to the Clinton administration and its role in creating the AsiaPacific Economic Cooperation (APEC) forum. Within APEC’s loose framework, senior ministers have been meeting regularly to discuss trade and related issues. APEC also has created a parallel private sector forum that has had its own work program and also has been urging political leaders to move ahead on trade reform. And, heads of state have met each fall for well over a decade, discussing common concerns and issuing a formal statement at the end of each meeting that customarily has endorsed more open, integrated economies. But APEC was never intended as a negotiating forum. That is what the Trans-Pacific Partnership framework is intended to provide. The Obama administration’s goals in the T.P.P. were outlined in testimony delivered Dec. 14, 2011, to the House Ways and Means Subcommittee on Trade by Ambassador Demetrios J. Marantis. Asia-Pacific as a dynamic region Overall, the administration recognizes that Asia-Pacific is a dynamic and economically expanding region. It offers attractive market opportunities for many U.S. industries, including agriculture. It also is a region with many countries negotiating bilateral or regional free trade agreements. Unless the United States joins in, it risks facing less favorable access to Asian markets than other countries. So,
28 / January 24, 2012 Milling & Baking News

the rationale for the T.P.P. is less a full embrace of freer trade than a defensive move to avoid being left behind by others. The first round of negotiations occurred in March 2010. Participating were eight other countries — Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam — important but not the

largest potential markets. At the APEC meeting in Honolulu last November, leaders of these nine countries “announced that their negotiating teams had reached the broad outlines of a T.P.P. agreement.” This framework is defined by five principles: (1) a comprehensive agreement eliminating trade and investment barriers; (2) rules to facilitate trade across integrated supply chains; (3) adopting a range of approaches developed in APEC, including more regulatory transparency and reliance on science, business facilitation, accommodation of the interests of small- and mediumsized enterprises and support for accelerating economic development; (4) addressing emerging issues around the digital economy, “green” growth and state-owned enterprises; and (5) an open-ended agreement to which others can join. What lies ahead All of this is encouraging for proponents of freer trade, especially those within the agricultural sector who understand that the dietary transformations occurring across the Asia-Pacific region offer tremendous export growth opportunities. Still, much work remains to finalize legal texts and to make the market-opening ushered in by the T.P.P. as comprehensive as possible. Four challenges stand out. First, the United States is insisting that the T.P.P. include labor provisions similar to what

have been incorporated into recent bilateral trade agreements. This always poses a difficult issue for negotiators and for the Congress that must approve any final deal. Second, it is important that the T.P.P. be a comprehensive agreement. There always are intense pressures on negotiators to exclude sensitive economic sectors from a reform agreement. The United States is no exception, facing resistance from some agricultural sectors and from the textile and apparel industries. But any agreement that holds back on reform of such sectors loses an important part of its trade- and job-creating value and makes reform of these sectors ever more difficult. Third, as tariffs have been brought down, nontariff barriers — including internal regulatory measures — have become more important in distorting trade and investment. This has been a particularly difficult issue for agriculture, where sanitary and phytosanitary rules and regulatory processes have often disrupted trade and frustrated reform efforts. Such issues are difficult but important to resolve, if the TPP agreement is to achieve its potential. Finally, several important countries — including Japan, Canada and Mexico — have expressed interest in joining the T.P.P. Their interest increases the potential value of a T.P.P. agreement, but it also complicates the negotiating process, as it involves a series of bilateral consultations and then a consensusbased decision on whether to accept their participation. Their interest may well pose some hard choices between increased scope, delay and extent of reform. All of this comes to a head in a presidential election year. This raises the political stakes while strengthening the hands of special interests. It will be a challenging environment in which to negotiate, let alone pass, a trade agreement. The next full round of T.P.P. negotiations is scheduled for March in Australia. It bears watching. MBN

Robbin S. Johnson, a fellow with the Hubert H. Humphrey Institute of Public Affairs, is a contributing editor at Sosland Publishing Co.
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