The Trans-Pacific Partnership, a trade deal negotiated among Pacific Rim countries and the U.S., represents improved trade access for U.S. beef all around, according the National Cattlemen's Beef Association's Associate Director of Legislative Affairs Kent Bacus.
With full text of the TPP now available, Bacus says there are several provisions in the deal important to cattle producers.
"In all of these countries, we are going to have a massive decrease on tariffs for U.S. beef," Bacus said. He highlighted the tariff reductions into Japan, which will go to about 9% over 15 years. About $1.6 billion in beef was sold to Japanese consumers last year, he said.
"We also have a very strong [sanitary and phyto-sanitary] chapter, which will address a lot of the non-tariff trade barriers," Bacus added.
Cattle producers ultimately will be impacted by the tariff reductions because access to export markets will be increased. Bacus explained that the U.S., for example, has long had very low tariffs, which allow strong imports and product availability for U.S. consumers.
"When you look at Japan, we face a 38.5% tariff on beef," Bacus explained, which drives up the price of U.S. beef to make it less competitive in the market. "The great thing about TPP is we're going to see those massive tariff barriers eliminated in many countries and phased down to very, very low competitive rates better than anyone else has been able to negotiate."
While the deal may mean an increase in beef coming into America, Bacus said the maturity and saturation of the existing U.S. beef market means the volume isn't going to be much more than what's currently available.
"The important part of this is that TPP opens these foreign markets for us," he said, which means building demand and reaching customers, while setting the trade framework for years to come.
While the trade deal has been agreed to among negotiators, Congress still has to OK the deal. Bacus said it's important that approval happens quickly because key competitors are gaining ground on the U.S.
One example is Australia, a key competitor for U.S. beef in Japan. With a trade agreement already in place with Japan and a lower tariff already, Bacus said the U.S. has market share to lose.
"Every day that passes, the U.S. falls further and further behind in the Japanese market," he said. "We've got to get politics out of the way … and we've got to move forward on TPP."
Congress has 60 days to look at the released text, and Bacus said NCBA is hopeful that the agreement will move through by spring 2016 and be in place prior to President Obama's term expiration.
Despite the optimism, Bacus offered one last concern: "If the United States is not going to negotiate the terms of trade in the Pacific Rim, the Chinese will."