Stevens: Trade deals portend good future for producers

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Editor’s Note: We are pleased to introduce Roger Stevens as a new PorkNetwork blogger. Roger is president of Stevens & Associates, Inc., a communications consulting firm based in Indianapolis, Ind. He graduated from Purdue University with a B.S. degree in Agricultural Communications and has worked with state and national agricultural organizations for more than 25 years. Roger is married to Jane Ade Stevens, CEO of the Indiana Soybean Alliance, the Indiana Corn Marketing Council and the Indiana Corn Growers Association. 

Roger’s Pork Policy Notes commentary will focus on policy issues related to pork production. His insight will help producers stay abreast of what’s happening on the local, state and national level in terms of government news and regulations. He knows the newsmakers and will provide a first-hand analysis of topics that impact the industry.

Roger StevensRoger Stevens U.S. pork producers and farmers in general received an early Christmas gift of sorts when the World Trade Organization (WTO) on December 9 sealed the first global trade deal since the trade body was created almost two decades ago. Known as the Bali agreement, it includes trade facilitation, agricultural subsidies and the development of least-developed countries (LDCs).

Basically this means less red tape at customs to speed up the passage of goods, but developing nations will be able to continue subsidizing their crops for food security.

“We are pleased a deal was reached, and we hope that the trade facilitation deal will help move more U.S. pork overseas,” said Dave Warner, director of communications for the National Pork Producers Council (NPPC) in Washington, D.C. “But the big deal for NPPC and the rest of agriculture and business is the Trans-Pacific Partnership (TPP) agreement. That is where the big bucks are.”

Motivated by the Bali agreement, TPP negotiators are now expected to finish their work in the early part of next year.

“It will be, by far, the most important trade agreement for pork producers, assuming we get an outcome where tariffs go to zero and non-tariff barriers are eliminated, as has happened in all other U.S. free trade agreements,” said Nick Giordano, NPPC’s vice president and counsel for international affairs. “The revenue generated and jobs created through a final TPP deal will be eye-popping. This negotiation has huge potential to positively impact the bottom line of U.S. pork producers, and NPPC is in the middle of the action.”

A spokesman for the U.S. Meat Export Federation (USMEF) agrees, primarily because Japan joined TPP earlier this year. “Japan is different because although it’s a huge importer of pork, the barriers to entry for U.S. pork producers are considerable with Japan’s gate-price system,” said USMEF Communications Director Joe Schuele. Under the gate-price system, various tariffs are assessed on imported pork.

“There are considerable market access gains that could be made in Japan,” said Schuele. “The problem is that we don’t know what the TPP outcome will be. It is difficult to speculate, and probably not wise.”

Last year Japan was almost a $2 billion market for U.S. pork. This year it will probably be a little less than that, but it’s still going to be by far U.S. pork producers’ biggest value market, according to Schuele.

Japan is such a big market that any time you move the needle, as TPP will do, there are tremendous potential gains for U.S. pork producers.

“The $2 billion in U.S. pork that was imported last year was about 18 percent of Japan’s consumption,” said Schuele. “Japan is not only the No. 1 target for most pork-exporting countries, but it also has considerable domestic production. There are big potential benefits if the cost of entry for U.S. pork is reduced.”

With TPP negotiations heating up, everybody is watching what is going to happen to the agricultural market access. Most of the participants strongly favor lower barriers in agricultural trade, but Japan is under a lot of political pressure not to lower barriers. We need to watch and see how that turns out.

The opinions expressed herein are those of the author.

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