Japan deal vital if TPP gets axe

If the Trans Pacific Partnership founders, the Canadian Cattlemen’s Association wants the federal government to pursue a separate free trade agreement with Japan.

None of the 12 member countries have ratified the deal, but if the United States turns it down, the entire agreement could fail, the CCA foreign trade committee was told during the Canada Beef Industry conference held in Calgary Aug. 9-11.

“It is a carefully constructed 12 party agreement and if one of the 12 were to decide not to be a member, I think that would certainly change the math for a whole lot of people,” said Doug Forsyth, executive director for Agriculture Canada and Canada’s chief agriculture negotiator.

Canada joined negotiations in 2012 to gain additional access to the lucrative Japanese beef market. Japan has agreed to gradually reduce beef tariffs from 38 percent to nine percent for all participants.

“Japan will probably pass it this October, but it is a question mark as to what is going to happen in Washington. It doesn’t look promising, if you listen to some of the election rhetoric,” said John Masswohl of the CCA.

Australia has an agreement with Japan and receives better access with lower tariffs than Canada.

Last year, Canada exported about $100 million worth of beef to Japan but paid nearly $40 million in tariffs, said Masswohl.

Canada needs to have another plan ready, say CCA members.

“Just sitting back and waiting until an opportunity presents itself instead of being prepared for it in my mind is dropping the ball,” said Dennis Laycraft, executive vice-president of the CCA.

Japan is not interested in another deal at this time.

“The focus for now is for the TPP for Japan and Canada. That is Plan A. Plan B is speculative right now, notwithstanding what is going on in the United States,” said Forsyth.

Canada went through seven rounds of talks with Japan to build a bilateral agreement, but when the TPP was proposed that was set aside.

Members of the U.S. based National Cattlemen’s Beef Association also want the deal signed.

“Trade agreements are never easy and they are never popular, but they are very economically important. In absence of trade agreements, realistically, we would degrade into chaos,” said NCBA president Tracy Brunner at the meeting.

Japan is seen as a key market that takes many meat products not popular in North America.

If the Japanese trade is lost, those products will have to be sold domestically, said Kent Bacus of the NCBA.

The head of corporate affairs for JBS USA said the deal is critical for North American beef producers and exporters.

“We must have access for these products. The demand long term is not going to be in Canada, it is going to be elsewhere. We need to have the opportunity to deliver quality Canadian product all around the world,” said Cameron Bruit.

Such a large agreement could also pressure China to allow more trade even though it is not a member of the TPP. Canada is allowed to ship frozen boneless beef but U.S. beef does not have access to China.

“TPP will allow us to put significant pressure on China to be responsible traders in the marketplace,” Bruit said at the beef conference, which was attended by more than 650 people.

He is confident the anti trade rhetoric will abate after the presidential election in November.

However, Douglas Porter, chief economist of the Bank of Montreal, is pessimistic.

“I happen to believe that the TPP is dead. There is a slight chance they might get it done in the lame duck session, but based on what both candidates have said it is very tough to see that approved,” said Porter.

Republican candidate Donald Trump is openly anti-trade and some of what he says is problematic for the markets, said Porter.

Democratic nominee Hillary Clinton has also said she does not favour the agreement as a concession to left-wing party supporters.

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