TPP Agreement Opens Export Doors

As the Trans-Pacific Partnership heads to Congress for approval, there is plenty of controversy about whether the accord that will open export-market doors goes far enough to promote US interests.

The National Cattlemen’s Beef Association issued a statement saying the trade agreement among 12 Pacific Rim countries concerning a variety of matters, including tariffs, was an opportunity for the US beef industry to gain market share.

The National Pork Producers Council agreed, saying it would “benefit all sectors of the US economy and will provide enormous new market opportunities for high-quality American pork products.”

However, there are detractors.  Presidential candidate Hillary Clinton has gone on record opposing the agreement, saying it doesn’t go far enough to promote US interests abroad.

The Coalition for a Prosperous America, with representatives from agriculture, manufacturers and labor, says it is a recycled North American Free Trade Agreement, which they say has added to the US deficit by allowing more access to US markets than it gets in foreign markets.




The agreement reduces Japanese beef tariffs to 9% over 15 years from the current 38.5%, and in some TPP countries, the barrier is as high as 50%.  Under the agreement, tariffs would be cut, offering new market access opportunities for US beef exports.

Last year, the US exported nearly $4 billion of beef to the region, which sounds pretty good.  But the new Japan-Australia Economic Partnership Agreement gives Australian beef lower tariffs and an economic leg up with the US’ largest beef customer in the region.

The agreement even covers some beef and pork by-products.  US exports of hides and skins to TPP countries currently face tariffs as high as 30%.  But the TPP cuts these tariffs, offering new market access for the largest single non-food item from cattle and hogs.

In 2014, the US exported $454 million in hides and skins to the region.  But in coming years, certain Australian, Chilean, Mexican and Vietnamese hide and skin exports receive preferential tariffs because of free-trade agreements with Japan.

US pork exports to TPP countries currently face high tariffs, which will be cut under TPP.  This includes Japan, the US’ top pork market last year with almost $2 billion in sales, despite high tariffs that fluctuate in a complicated system, and nearly $5 billion of pork and pork products to the TPP region.

Without the agreement, the US pork industry faces a competitive disadvantage because Australia, New Zealand and ASEAN countries can export pork to Vietnam at lower tariff rates because of another free-trade agreement.

US poultry producers also would be behind the 8-ball without the TPP because of the Australia-New Zealand-ASEAN trade agreement.  Currently, US poultry faces tariffs as high as 240%.




Cash fed cattle markets Wednesday were quiet as futures prices soared for a second straight day.  Scattered bids were heard at $118 per cwt on a live basis in Kansas, but asking prices were holding nearer $127.  Dressed-basis markets were not well defined.

Live-basis cash prices last week plunged $10 to $12 to $116 to $124 per cwt.  Dressed-basis sales were at $187 to $190, down $12 to $14.

The USDA reported lower boxed beef prices Wednesday with its choice cutout down $0.59 per cwt at $203.58 and select off $1.17 at $197.70 with 187 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was $182.27 per cwt, down $0.02.  This compares with the Oct settlement Wednesday of $184.95, up $2.42.