TPP, TTIP & YOU: Good Things on the Horizon American Farm Bureau Federation Veronica Nigh, Economist Iowa Economic Summit Monday, June 27, 2016
Agenda Making the Case for Trade TPP TTIP Lets get political, political
Production Worth Sharing Important to All: 20% of volume 30% of value Even More Important to Some: 70% of tree nuts 45% of soybeans 50% of rice 30% of fresh fruits ~25% of pork ~15% of beef 13% of corn
By the Numbers $133 B 7-10 % $2.1 B
U.S. Exports to FTA Countries Grow Faster Than to the Rest of the World
Where to Aim?
- 255 Million people added to trade agreements - $19 Billion in Ag Exports - Most Ag Products go duty free immediately Have agreements with several countries and economic growth from agreement thus limited Labor & Environmental protections
Example: Japan-Australia FTA signed in 2014 and implemented in January 2015.
AFBF TPP Model Dynamic interrelationships among the variables affecting supply and demand in the main agricultural sectors of the United States, TPP partners and major competitors outside of TPP. The model consists of a system of equations covering the corn, soybean, wheat, rice, cotton, beef, pork, poultry and dairy sectors. The system provides a systematic framework that takes account of interactions among the agricultural sectors both in U.S. and world markets.
Results TPP No U.S. Participation TPP with U.S. Participation CHANGE (Billion Dollars) % Farm Income 63.31 67.69 4.38 6.9% Crop Receipts 219.71 222.38 2.67 1.2% Livestock Receipts 197.42 203.21 5.79 2.9% Total Receipts 454.84 463.30 8.46 1.9% Total Expenses 415.43 419.86 4.43 1.1%
Gains From Full TPP Implementation United States Agricultural Product Cash Receipts Net Exports Million $USD Corn 680.4-91.1 Soybeans and Products 529.7 297.0 Wheat 37.1-16.7 Cotton 21.0 25.2 Rice 46.1 90.1 Fruits and Nuts 825.7 734.9 Vegetables 471.3 419.5 Beef 1,136.7 1,048.3 Pork 1,091.9 939.6 Poultry 628.0 169.0 Dairy 275.3 131.1 Other Ag 2,716.1 1,565.5 TOTAL 8,460.0 5,312.3
Gains From Full TPP Implementation Iowa Agricultural Product Cash Receipts Net Exports Million $USD Corn 118.8-15.9 Soybeans and Products 73.5 41.2 Wheat 0.0 0.0 Cotton 0.0 0.0 Rice 0.0 0.0 Fruits and Nuts 0.1 0.1 Vegetables 0.6 0.5 Beef 67.0 61.8 Pork 328.5 282.7 Poultry 19.0 5.1 Dairy 6.2 3.0 Other Ag 19.0 11.0 TOTAL 632.8 389.4
GMOs Timely Approval Process Low-Level Presence Geographic Indications Guidelines for countries to determine generic terms. Tobacco Provisions A tobacco control measure is not subject to investor state dispute settlement (ISDS)
SANITARY/PHYTOSANITARY BARRIERS The TTP SPS provisions build upon and enhance the WTO SPS Agreement to address specific and systemic SPS trade barriers by some countries. The TPP includes the removal of nontariff trade barriers including SPS measures used to block agricultural and food trade. The inclusion of risk-based scientific decision making will limit the use of non-tariff barriers. The TPP SPS provisions include science-based risk assessments, harmonization, adoption of internationally- agreed standards, a rapid response mechanism for port of entry disputes and recognition of systems-based approaches including equivalence.
USITC Report Among broad sectors of the U.S. economy, agriculture and food would see the greatest percentage gain relative to the baseline projections By Year 15 Output: $10.0 billion, or 0.5% higher Employment: 0.5% higher Net Exports: $4.5 billion, or 1.1% higher
Zooming Further Out Peterson Institute Petri/Plummer Economic Impact Study According to the Petri/Plummer projections, approving and implementing TPP will result in additional U.S. real national income of $131 billion annually by 2030 and will grow U.S. exports each year by $357 billion by 2030. Peterson also found that income growth will result in higher wages for American workers. Importantly, the Peterson/Petri projection found that if TPP is delayed by even one year, the U.S. will see an estimated one-time national loss of $94 billion.
http://tpp.fb.org/ More Resources: http://www.ilfb.org/tpp/ http://www.fas.usda.gov/topics/transpacific-partnership-tpp https://ustr.gov/trade-agreements/freetrade-agreements/trans-pacific-partnership
20 Trans Atlantic Trade & Investment Partnership U.S. EU Ag Trade Balance 15 10 5 0-5 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-10 U.S. Exports U.S. Imports Suprlus/Deficit
180 160 140 Trans Atlantic Trade & Investment Partnership EU U.S. Tariff Comparison % 120 100 80 60 EU U.S. 40 20 0 Simple average, using DDA ad valorem equivalents
Ag Issues in TTIP Tariffs SPS Standards Biotechnology Geographic Indicators (GI s) Animal Issues
TTIP Outlook Heading for the Brexit Even if the European Commission still has bandwidth to carry on TTIP talks, it would need time to recalibrate its proposals to reflect the U.K. exit, just as the negotiations were supposed to be entering their endgame. Next Round: Still on July 2016, 14th in the negotiation's 3-year history Will likely focus on what will happen next
Parting Thoughts Trade is important for global economic growth. Agriculture needs to create new demand for farm products to help support farm income. Strong political headwinds today for trade agreements.