Wheat organizations ask USTR to work toward re-joining TPP
March 7, 2018
WASHINGTON — U.S. Wheat Associates, the National Association of Wheat Growers and 33 state wheat organizations have expressed hope in a letter to U.S. Trade Representative Robert Lighthizer that the administration will immediately prioritize accession to TPP to save the valuable Japanese market for U.S. wheat farmers.
"Once TPP is ratified, U.S. wheat exports to Japan will be at serious risk," the letter stated. "TPP will reduce the effective tariffs that Japanese flour millers pay for imported Australian and Canadian wheat over nine years from about $150 to about $85 per ton. Effective tariffs on imported U.S. wheat would remain at about $150 per ton. Loss in market share and its negative effect on farmgate prices are likely to come much sooner, as Japanese millers reformulate their product mix to avoid the need to purchase artificially expensive U.S. wheat. Lost market share is incredibly difficult to regain."
The wheat industry organizations noted that Japan has, on average, imported more U.S. wheat than any other country for many years. U.S. wheat market share is typically more than 50 percent of the 6 million metric tons (MMT) of wheat Japan imports annually. Sources within the Japanese milling industry however estimate that could quickly fall to less than 25 percent under TPP 11 rules. At the average price Japan has been paying for U.S. wheat the past five years, that would represent an annual loss of almost $500 million for farmers, rail and barge operators and grain handlers.
"Unfortunately, the agreement among the TPP members will have a devastating impact in rural communities across the wheat belts of the Great Plains and the Northwest, though it will hurt the income of every American farmer growing wheat," the letter continued. "The president has promised to negotiate great new deals. American agriculture now counts on that promise and American wheat farmers – facing a calamity they would be hard-pressed to overcome – now depend on it."
The organizations said they welcomed the president's recent openness to joining TPP if better terms for the United States can be negotiated. They also suggested that Ambassador Lighthizer could include acceding to the TPP as an objective in the administration's report to Congress that will outline its request to extend Trade Promotion Authority.