Australia prospers out of US TPP policy


Agribusiness
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FARMERS in the United States are leading the charge against President Donald Trump’s trade policies after the Trans-Pacific Partnership (TPP) handed Australia a huge advantage over America in the lucrative Japanese wheat market.

FARMERS in the United States are leading the charge against President Donald Trump’s trade policies after the Trans-Pacific Partnership (TPP) handed Australia a huge advantage over America in the lucrative Japanese wheat market.

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US wheat growers in the States that helped elect Mr Trump are up in arms after analysis by their powerful lobby groups showed Japanese tariffs on wheat imports from Australia will drop by $US65 ($80) a tonne.

Australia, along with TPP-member Canada, is eyeing a much bigger piece of the Japanese wheat market, which is dominated by the US.

The US farming lobby is angry that Mr Trump has failed to deliver the trade deals he promised after abandoning the TPP in January last year.

They are also applying the blow torch over his negative attitude to the North American Free Trade Agreement which underpins US wheat sales to Mexico.

The Australian industry has little sympathy for their counterparts in the US, who generally receive far more in terms of government support.

WAFarmers Grain Section president Duncan Young said the US could have had a seat at the TPP table but chose to turn its back on the trade deal.

Mr Young said it was unclear how the US had calculated the $US65/t advantage for Australia, but there was no doubt local growers would get a big boost from the TPP.

“There appears to be a lot of positives for us and I can’t see too many negatives,” he said.

“Japan is fairly unique in that it is still a regulated market with MAFF (Japan’s Ministry of Agriculture, Forestry and Fisheries) controlling the buying.

“It is not black and white what we will get out of it because of that regulated system, but that will become clearer and we see substantial benefit.”

The Australian industry has kept a lid on its celebrations amid delicate talks in Japan about the progressive dismantling of the centralised buying system controlled by MAFF in conjunction with Japan Flour Millers Association (JFMA).

Key figures in the trade were in Tokyo for talks and celebrations to mark JFMA’s 70th anniversary when the TPP breakthrough was announced last week.

The jubilant Australian delegation was contrasted by US representatives, who were rocked by the TPP breakthrough.

Major Japanese players have already notified Australian exporters they expect the US to be at a disadvantage for one of the few times since 1949 when a trade delegation from Oregon gave it prime position in the market.

The US has averaged annual sales of 3.1 million tonnes of wheat to Japan over the past five years and has about 50 per cent of the total market share.

Kevin Tongue, who runs a 2000 hectare property near Tamworth, New South Wales, of which 25pc is devoted to wheat and barley, said it was important that Australian growers were able to gain access to markets freely without being handicapped by tariffs.

“It’s got to be a level playing field for everyone,” Mr Tongue said.

“The more export markets that are open to us the better.”

The influential US Wheat Associates (USW), representing 17 States, and the National Association of Wheat Growers (NAWG) warned the TPP put overseas demand for US wheat at risk and sheeted the blame to Mr Trump.

USW policy director Ben Conner said the TPP agreement minus the US sent “another discouraging signal” to long-time customers in Japan.

Mr Conner said the TPP would put US growers at a $US200 million ($247m) a year disadvantage in the Japanese market.

“As the agricultural community warned when the President made the announcement, withdrawing from TPP was short-sighted and unnecessary and now US wheat farmers could take the hit,” he said.

NAWG president Gordon Stoner, who farms in Montana, said the TPP agreement “should serve as a rallying cry for farmers, ranchers and dairy producers calling for the new trade deals we were promised when the President walked away from TPP”.

“An already stressed agriculture sector needs the benefit of free and fair trade now,” he said.

The export-focused wheat industry in WA will build on its strong relationship with Japan as the almost exclusive supplier of varieties used to make udon noodles.

WA growers sell up to one million tonnes of noodle wheat a year to Japan, with the Japanese anxious to ensure that supply is kept up.

US farmers also want more action from Mr Trump to secure the future of NAFTA as negotiations with Canada and the US drag on into a sixth round.

They joined forces with Canadian wheat growers and Mexican flour millers last week to urge all sides to get on with updating the 23-year-old agreement.

The Australian government, meanwhile, has reignited its campaign to get the US back to the TPP negotiating table, after Mr Trump hinted at a rethink of the US position.

“The way it was structured was terrible,” he told CNBC in an interview at the World Economic Forum in Davos.

“If we did a substantially better deal, I would be open to TPP.”

Trade Minister Steven Ciobo spoke to US counterpart Robert Lighthizer about the TPP in Davos at the weekend, while Foreign Minister Julie Bishop used events around the “G’Day USA” promotional weekend in Los Angeles to highlight the importance of the US to the Indo-Pacific region.

On Sunday, Deputy Prime Minister Barnaby Joyce weighed into the campaign.

“As it’s not signed yet I don’t want to say these positions are finalised,” Mr Joyce said in an interview on Sky News.

“The final draft of it, I hope, is determined once the United States is part of it.

“If there are changes required, minor changes, to bring the US (in)... that should be done.”

Mr Joyce also said the government had a duty to explain the benefits of the landmark Pacific-wide trade deal agreed last week – something Labor had been demanding be done through an analysis by the Productivity Commission.

Shadow trade spokesman Jason Clare is pushing for the government to have the Productivity Commission model the final details of the 11-country deal when it is released in March in Chile.

“In an era when people are sceptical of trade deals it would help the government – and I think it would be good for Australia – if we had an independent report saying: ‘here’s the benefits, this is where the jobs will be created, these are the industries that will benefit, these are the parts of Australia that will be better off and here’s the areas where we need to do more work to help people that won’t be better off’,” he said.

Former Labor trade minister Craig Emerson is backing Mr Clare’s position, writing in Monday’s The Australian Financial Review that there is nothing anti-trade or anti-jobs about having the Productivity Commission analyse the agreement.

Dr Emerson cites World Bank modelling showing the revised trade partnership without the US would deliver only a “negligible” increase in Australia’s GDP.

“But that doesn’t mean the TPP is not worth having,” he wrote, saying it could become a building block for the Asia-Pacific Economic Co-operation forum’s vision for an Asia-Pacific free trade area, and may include China in the long run.

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