TPP (Trans-Pacific Partnership) Deal Signed

On Tuesday 6th October in Atlanta representatives of 12 countries signed the Trans-Pacific Partnership (TPP) agreement, a free trade deal which seeks to cut tariffs and introduce common standards across the Pacific region. The deal covers key developed countries including the US,  Japan, Canada, Australia as well as emerging nations like Chile, Malaysia and Vietnam.  The 12 nations collectively accounted for almost 36% of global GDP in 2014, and 11% of the world’s population, this compares with the EUs 24% and 7% of global population.

The size of the deal is important – it is seen by some as a model for other potential large-scale trade deals (such as the TTIP talks with the EU). China is noted by its absence from the TPP, and there is some speculation that China will join with the TPP in some future agreement. Slower Chinese economic growth could make this scenario more likely. Some have also suggested that the size of the TPP could act as a counter balance to China’s growing influence within the Asia-Pacific region. 

The negotiations which began in 2008 have been a long drawn out process. Despite the signing of the deal lawmakers in each country will still have to ratify the agreement, before it enters into force, and significant opposition still exists in some countries for example Japan. Many groups and organisations have expressed concerns over the transparency of the agreement and the negotiations. The deal will be put to the US Congress in early 2016.

Tom Vilsack the US Agriculture Secretary said that:

“The agreement would eliminate or significantly reduce tariffs on our products and deter non-science based sanitary and phytosanitary barriers that have put American agriculture at a disadvantage in TPP countries in the past.”

In the US farm producer groups and agribusiness reacted positively to the signing of the agreement, however were generally still waiting until the exact details of the deal are released. There is still opposition including labor unions who fear the agreement will impact on jobs. Agriculture is a significant component of the agreement, and had presented some of the biggest challenges in securing an agreement. For example at the last-minute New Zealand has pushed for greater access to the US dairy market. Canada’s supply management system for dairy and poultry was another point of contention, however despite some concessions it appears to have remained intact. Canadian cattle farmers have welcomed the deal, hoping for greater market access to Japan, where they feel they are currently at a disadvantage with Australian producers who have greater access under an existing Australia-Japan free trade agreement.

When agreement comes into force we can expect to see a significant boost to agricultural trade within the Pacific region. The removal of tariffs and ‘Non Scientific’ phytosanitary barriers is likely to favour those countries with competitive advantages, and a good animal and crop health status. Japan a major food importer in the TPP with a highly protected farming industry, is likely to see increased imports from countries such as Australia, New Zealand and the US. The removal of tariffs by emerging markets such as Vietnam and Malaysia will also see greater opportunities for agricultural exporters within the TPP.