After five years of negotiations, trade ministers from the 12 member nations announced that the Trans Pacific Partnership has been agreed upon and completed.
The 30-chapter agreement forged between the U.S., Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam will cover approximately 40% of the world’s economic output in sectors including agriculture, drug patents, and automobiles, eliminating over 18,000 tariffs currently imposed on U.S. exports, according to the White House.
Intense negotiations have been ongoing in Atlanta over the past week to hammer out the final points of contention between member nations including disagreements surrounding tariffs on rice, sugar, and dairy. These included a disagreement between New Zealand, one of the world’s top dairy producers, and Canada over dairy tariffs.
The accord still needs to gain approval from a divided U.S. Congress, but if it is enacted and signed into law, it would be the most encompassing free trade agreement for the U.S. since the North American Free Trade Agreement of 1994.
Commenting in an interview before the final agreement was announced, Darci Vetter, the U.S. Trade Representative’s chief agriculture negotiator said “We have some wins in here.”
In 2014, the value of U.S. agricultural exports reached US$150 billion, and in volume, accounted for 20% of the country’s agricultural output, according to government figures, and the TPP is expected to increase these sales by ‘billions’ of dollars.
The agreement will eliminate duties on U.S. pork exports to Vietnam, while Japan will cap its pork tariff at 50 yen per kilogram and will loosen trade restrictions allowing for U.S. exporters to ship certain cuts of meat to the Japanese market.
For Japan, beef, dairy, rice, sugar, and grains were key points of concern throughout negotiations. Although lower than the U.S. had originally hoped for, the country has agreed to set a new rice quota of 50,000 tons for the U.S., which will increase to 70,000 tons over the next 13 years.
For U.S. beef, the passing of the TPP is being touted as a ‘major win’, with the reduction of tariffs that will create a more even playing field for U.S. beef exports on global markets.
Possibly the largest, and most emotionally-charged topic to be agreed upon was dairy. Australia and New Zealand requested greater access to the U.S. market, but the real contention was with Canada, which has long conducted a framework of protectionist tariffs and supply management systems to insulate its dairy sector from global competition. Canadian farmers protested in Ottawa, driving their tractors to the capital to pressure the government to not agree to the TPP deal. However, after successful negotiations, Canada agreed to open foreign dairy quotas to 3.3% of the market over five years, and to open 2.3% of its egg market, 2.1% of its chicken market, 2% of its turkey market, and 1.5% of its hatching egg market.
It is not known when President Obama will notify Congress that he intends to sign the accord, however, once it is signed, Congress will have 90 days to consider it.