U.S. consumers eat about as much pork as they did in 1900, a little over 40 pounds per year per person. Although the number of Americans increases every year, an aging population and fewer immigrants mean population growth has slowed to a trickle. The National Pork Board’s newly appointed task force might address U.S. pork consumption, but it probably will not increase much, if at all, in the foreseeable future.
This means pork producers must rely on international trade if they want their industry to grow. A rising middle class in the developing world has an appetite for animal protein, along with the ability to actually put more meat on the table. This scenario provides ample opportunity for pork producers to cash in on this worldwide trend.
There are obstacles, however. Many countries protect their producers from stiff competition by putting up import barriers with tariffs and red tape. That’s why the Trans-Pacific Partnership (TPP) agreement has generated so much excitement, especially since Japan joined the negotiations last year.
“Japan 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,” says Nick Giordano, NPPC’s vice president and counsel for international affairs.
Although there was some optimism last December that the TPP would be concluded by now, no final agreement has been reached. This is largely because Japan, which joined the TPP talks suddenly last year, has been dragging its feet about removing some tariffs that affect agricultural commodities like pork.
As the feverish discussions come to a head, the reality and complexity of the negotiations become clear. Japan entered TPP only because Shinzō Abe, elected prime minister of Japan in December, 2012, campaigned on a radical new economic policy that promised to revive Japan’s lagging economy. But the country’s agricultural community has resisted Abe’s efforts to liberalize trade with other countries.
There are rumors that the United States might agree to lower tariffs instead of eliminating them altogether, but Giordano dismisses that out of hand.
“The pork industry in every nation says it will be devastated, eliminated, annihilated, etc. by U.S. pork imports when duties are eliminated pursuant to a free trade agreement,” counters Giordano. “Mexico producers argued hard and long they would become extinct because of the North American Free Trade Agreement (NAFTA).” That never happened.
Pointing to another example, Giordano says, “very poor nations such as Nicaragua eliminated tariffs on pork, and they still have a domestic pork industry. Japan has argued, and I kid you not, that they can't take U.S. skis because their snow is different; they can't take U.S. earth-moving equipment because their dirt is different; and they can't take U.S. meat because their intestines are different.”
Giordano believes Japan is derailing the entire TPP negotiation. “If the U.S. agrees to Japan's unprecedented demands, the entire TPP will unravel as every nation pulls back on its sensitivities.”
NPPC expects Japan to do what every other U.S. free trade agreement partner has done and what every other nation involved in TPP is prepared to do — fully open its market to U.S. pork by eliminating all protection. In Japan, that means elimination of the gate price, tariffs and specific duties.
“The U.S. is willing to eliminate tariffs on 99.5 percent of its tariff lines,” explains Giordano. “Other TPP nations are willing to eliminate tariffs on virtually all products.”
If Japan is permitted to exempt so many tariff lines from tariff elimination, other TPP nations are expected to pull back offers — not just in the market access area but in other areas such as rules, too.
As it looks now, if there is a final deal, it might be an agreement without Japan. That means 11 countries will sign the agreement, instead of 12. This will still be good for U.S. pork exports, but not nearly as good as it could have been with Japan on board.