Agriculture Producers Seek Quick Trade Pacts in Wake of TPP

The U.S. withdrawal from the Trans-Pacific Partnership leaves Montana farmers and ranchers hoping for deals to keep exporting to foreign markets

By Molly Priddy
A wheat field and irrigation equipment near Ronan. Beacon File photo

In one of his first actions as president, Donald Trump withdrew the United States from the Trans-Pacific Partnership, a massive trade pact that includes 12 nations equaling 40 percent of the world’s economic output.

It was an expected move from Trump, who promised to get rid of the TPP during his campaign, but the withdrawal has put Montana’s agricultural producers in a bind when it comes to exports, at least in the immediate future.

“We have to have those foreign markets,” said John Youngberg, executive vice president of the Montana Farm Bureau Federation. “That’s what buoys our economy.”

The TPP, signed in February 2016, was created with 12 countries bordering the Pacific Ocean as a way to promote economic ties among those nations. It decreased tariffs, and the members wanted to build on similar economic policies and rules. If it came to fruition — that is, if all 12 countries ratified it — it was designed to create a single, multilateral market for trade.

So far, Japan is the only country that has ratified the TPP. The other member nations are Malaysia, Singapore, Brunei, New Zealand, Canada, Mexico, Chile, Australia, Peru, and Vietnam. In the U.S., former President Barack Obama spent years on the pact, but Congress never ratified it.

Opponents to the TPP, which include several manufacturing unions, say the deal favors big business and other countries at the expense of America’s economy and workers. Trump called the TPP a “horrible deal” while on the campaign trail, and, when he signed the notice of U.S. withdrawal, said, “Great thing for the American worker that we just did,” according to the Associated Press. Democratic presidential candidate Hillary Clinton also considered the TPP too weak to provide more jobs in America.

In Montana, however, agricultural producers saw the TPP as a good way to boost the export market into Asian countries, especially into Japan.

Exports are a major piece of the agricultural economic puzzle in Montana. Agriculture is a $5.3 billion industry in the state, and the U.S. Department of Agriculture reports that $1.9 billion of that was exported in 2015. Having a multilateral trade agreement with 11 other countries was helpful, Youngberg said.

“We looked at it as leveling the playing field,” Youngberg said.

“When you do it with a group of countries like that, I think you get a little more bang for your buck.”

At the Montana Department of Agriculture, which is currently without a director, the mood regarding the TPP is one of a missed opportunity but determination to move forward.

“While many groups had legitimate concerns about the TPP, we viewed it as an opportunity to develop new trade relationships and access new markets for Montana’s world-class agricultural products,” said Andy Fjeseth, communications officer for department. “With that being said, we will continue to work with our existing trade partners to strengthen those relationships while also searching for new opportunities that benefit Montana’s producers.”

Montana Sen. Jon Tester, a Democrat from Big Sandy, didn’t vote for or against the TPP in Congress, and said he had some issues regarding currency manipulation. But Tester doesn’t believe the whole deal should’ve been tossed out.

“The issue I had with this TPP was with currency manipulation; it wasn’t anything else other than that,” Tester said in an interview last week. “I think it’s a big mistake to throw the whole thing out and go with bilateral agreements.”

In the days since signaling the withdrawal from the TPP, Trump has said his administration will seek bilateral deals with Japan and other countries within the TPP, rejecting the multilateral model.

Dan Kidd, a Bigfork member of the board of directors for the Montana Grain Growers Association and National Barley Growers Association, said there’s concern and disappointment about the TPP withdrawal, but optimism if the bilateral agreements get underway quickly.

“The one disadvantage we have if it’s (ratified by the other countries) and we’re on the outside, it gives our competitors like Australia and New Zealand an advantage over us,” Kidd said.

Tester was also concerned about losing those markets to competitors if the U.S. is out of trade agreements.

“Once those markets are gone, you can’t get them back,” Tester said.

Youngberg, of the Farm Bureau Federation, said the TPP could have opened up access to a $63 billion market for Montana ag producers, and economists for the Farm Bureau Federation estimated an additional $86.9 million for Montana’s economy.

He said he hopes the U.S. maintains good relations with these countries so trade agreements can be made.

“Those have to be done in a fairly quick matter,” Youngberg said of bilateral agreements.

Other trade issues could impact Montana farmers under the Trump administration. For instance, the president has floated the idea of a 20 percent tax on Mexican imports to pay for a wall between the two countries. Confusion about what he means has led to the idea of a tariff, because those are more capable of being tailored to a specific country.

Economists have said such a tariff could reduce trade flows in general, and Mexico is Montana’s second-largest market for wheat. Canada is the largest.

“Japan is pretty critical; Japan has indicated their willingness to sit down and negotiate with the U.S.,” Kidd said. “We’re going to want to keep our eyes on Mexico. That is horrendously important to agriculture in the United States.”

Trump has also signaled a desire to renegotiate the North American Free Trade Act (NAFTA) with Mexico and Canada. Tester said he’s keeping an eye on the issues, but information is difficult to come by with an administration that keeps a tight lid on government agencies.

“The problem is when he locks down agencies so we can’t get information, it’s really tough to keep tabs on stuff,” Tester said. “We’re going to fight like hell to be in a position so we can do that oversight.”