Ag trade takes center stage at Capitol Hill hearing

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The House Ways and Means Subcommittee on Trade took time this week to focus on the benefits expanding agricultural trade and eliminating barriers to agricultural exports, especially with regard to the pending Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), has on job creation and economic growth in the United States.

Subcommittee Chairman Devin Nunes (R-Calif.) said tariff and non-tariff barriers to trade must be eliminated in current negotiations. With regard to TPP negotiations, Chairman Nunes said countries must commit to full tariff elimination in order to be part of the trade deal. He said while many sanitary and phytosanitary (SPS) barriers may be implemented to protect human, plant and animal health, many measures are “thinly veiled protectionist barriers that ignore science and international standards, and do not enhance food safety in any way.” He said the TPP and TTIP offer good opportunities to reduce both tariff and non-tariff barriers.

Dermot Hayes, Iowa State University economics and finance professor, was the first to testify at the hearing and said if successful, the current TPP and TPIP negotiations will have a “profoundly positive impact on U.S. agriculture.”

With regard to negotiations of the TPP, which represents a group of countries with almost 800 million consumers and 40 percent of world GNP, prior to Japan’s inclusion in the negotiations, the focus was on eliminating all tariff and non-tariff barriers. Japan’s has thrown a wrench in what he called previously “surprisingly successful” negotiations.

“Unfortunately, Japan has recently hijacked the negotiations by insisting on permanent protection for its beef and pork, dairy, wheat, rice and sugar sectors,” he said, noting that Japan has indicated it will use the money generated by the tariffs to subsidize the relevant sectors.

In fact, in late May, the National Pork Producers Council, the International Dairy Foods Association, the National Association of Wheat Growers, the USA Rice Federation and the U.S. Wheat Association said the Obama administration should conclude TPP negotiations without Japan unless the nation agreed to significant market access for U.S. products.

Hayes urged U.S. negotiators to hold out for an agreement that results in eventual elimination of trade barriers for various reasons, including that other nations, such as China, may seek trade deals with the United States similar to the agreement with Japan – deals that do not fully eliminate barriers to trade. “The value of all future free trade agreements for U.S. agriculture likely will be diminished and the U.S. will lose future exports and jobs,” he said.

On the TTIP front, Hayes, who grew up in Ireland, said he’s seen firsthand the impact a fragmented, non-science based regulatory system, like the one in the European Union that relies on the “Precautionary Principle” hinders trade, economic growth and consumer choice. He added that the TTIP negotiations give the nations an opportunity to debate the merits of a science-based approach in the United States compared to the current approach of the EU.

“In an ideal world, the U.S. and the EU systems will be viewed as equivalent and EU consumers will have a choice among safe alternatives they currently lack,” Hayes said. “Unless these deals result in regulatory equivalence, countries will be able to impose new subjective barriers to replace those that have been eliminated. With equivalence, the U.S. will be able to avoid the type of trade disruption currently roiling the U.S. corn market due to Chinese refusal of ships containing a particular type of genetically modified corn.”

To read Hayes’ full testimony, click here.

National Cattlemen’s Beef Association President Bob McCan also participated in the hearing. Like Nunes and Hayes, McCan dedicated a great deal of his comments on fully eliminating trade barriers and the impact Japan has on current TPP negotiations.

“Japan’s unwillingness to abide by the principles of free trade threatens the entire process,” said McCan. “We encourage USTR to remain vigilant and to continue to push the Japanese toward tariff elimination on beef.”

McCan’s comments can be ready here

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