State support for agriculture and its regulation within the framework of various regional and bilateral trade agreements is carried out on the basis of and in accordance with the legal norms developed by the World trade organization (WTO). In contrast, under the TPP participants attempt to overcome the prevailing in world trade barriers and difficulties. At the same time, countries have agreed to adopt measures that are currently only being discussed within the WTO.

The TPP agreement consists of 29 chapters covering a wide variety of topics, including market access, financial services, labour, investment, environment and others. Provisions defining the rules and measures for liberalization of agricultural products trade between TPP participants are contained in the second (tariffs and quotas), third (criteria for conformity of products produced in one of the TPP countries), seventh (phytosanitary control), eighth (technical barriers to trade) and eighteenth (intellectual property) chapters of the agreement [1].

As the main instrument for liberalizing trade in agricultural goods within the partnership (as in many other similar agreements), countries use mechanism of the elimination or significant reduction of import duties, as well as increasing quotas for duty-free import of goods from the TPP member countries. However, unlike other regional and bilateral agreements in which TPP countries participate, they managed to agree on the inclusion so-called “sensitive” goods (rice and pork for Japan, dairy products for Canada, etc.) in this list. Although the cancelling or reduction of duties for many of these goods will take place within several stages during quite a long period of time (from 2 to 20 years).

Along with the tariffs a significant barrier to the liberalization of international trade are non-tariff regulatory measures. In this regard, in the TPP agreement several provisions are devoted to sanitary and phytosanitary regulation. At the same time, according to some authors [2], these provisions are ahead of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures in many areas, including risk assessment and management, transparency of regulation, border and laboratory control, as well as addressing export control issues. In particular, it is planned to establish an ad hoc Committee on sanitary and phytosanitary control within the framework of the TPP in order to solve problems more mobile. In addition, the parties are committed to take adequate risk management measures in this area that minimize or do not distort trade indicators. In case of a ban or restrictions on import, the importing party shall notify the exporter on the reasons for this situation, and to try to solve the problem in the course of technical consultations exporter country officials.

In addition, the TPP adopted a simplified approach to potentially harmful products based on the principle of “risk management”, used in the United States and suggesting that it is possible to produce and sell products if its harm to humans has not yet been proven [3]. In this regard, it is planned to establish a group on biotechnology in agriculture, which will exchange and consider information about the TPP member countries legislative regulation of the use of biotechnologies in agriculture.

The TPP also attempts to bypass the provisions of other countries’ intellectual property laws that restrict trade in agricultural goods. In particular, some works give an example of “Feta” cheese produced in the USA, which cannot be sold under this name in the EU countries, since it is already patented as a geographical indication of the region of production [2]. A similar situation occurs in countries that have concluded trade agreements with the EU, which recognize the protection of the relevant geographical names. The TPP countries agreed to discuss each case individually with a view to facilitate an access to their markets.

A number of innovations have also been introduced within the TPP (compared to the WTO and other regional and bilateral trade agreements) on the issue of agricultural export. Thus, members agreed to abolish the use of export subsidies for products sold within the partnership. At the same time, the agreement notes the negative role of restrictions on the export of agricultural products, in connection with which participants should not impose them for more than 6 months (in consultation with the importing countries). Countries agreed to continue multilateral consultations to reduce the use of export credit, guarantees and insurance. TPP members have also agreed on joint work to promote these initiatives in the WTO. It is also planned to promote proposals to limit government support to state agricultural corporations [4].

Agriculture complex is one of the most important components of economic development for the TPP members. These countries account for 26.2% of world agriculture products export (figure 1) and 22.2% of world import (figure 2). At the same time, almost half of agriculture export-import operations (44.4 and 51%, respectively) of TPP countries take place among themselves (table 1).

Table 1 – Indicators of TPP countries agriculture export and import in 2015, billion dollars
(based on data from WTO, UN (Comtrade)

Figure 1- Share of major regional integration groups in world agricultural export, billion dollars

Figure 2 – Share of major regional integration groups in world agricultural import, billion dollars

The main economic effects for agriculture from ratifying the agreement will be expressed in easier access to the TPP countries markets due to the abolition or significant easing of tariff and non-tariff trade restrictions.

Table 2 – The average level of import duties on agricultural products (MSN) in TPP countries in 2015, % [5]

First of all, we are talking about the abolition (restriction) of import duties on agricultural products. Relatively closed markets of Japan, Vietnam, Canada, Mexico and Malaysia are of considerable interest in this regard (table 2). The greatest export benefit can be gained from the reduction of import tariffs on beef and pork (in Japan, Vietnam, USA, Mexico), poultry (Canada, Vietnam, Mexico), dairy products (Canada, Japan, USA, Mexico), corn, soy and wheat (Japan, Vietnam, USA, Malaysia), sugar (US, Japan, Mexico), tobacco (United States, Japan, Malaysia, Vietnam), barley, rice and citrus (Japan), cotton, nuts and fruit (Vietnam) [2]. Australia, New Zealand, Brunei and Singapore already have some of the most liberal import duties in the world, so that other TPP countries will benefit minimally from their markets.

The main importers of agriculture products in the TPP are the United States (156 billion dollars), Japan (73), Canada (39), Mexico (28), Vietnam (18.5). At the same time, the main exporters who will be able to get additional profit from the development of these markets will be the USA, Canada, Australia, Malaysia, Vietnam, Mexico and New Zealand. However, their shares will depend on a variety of factors, including the existing preferential trade agreements among TPP countries. Accordingly, countries that do not currently have these agreements with the main importers of agricultural products listed above (table 3) can benefit greatly.

Table 3 – Bilateral trade agreements among TPP countries [6]

Based on table 3 data, the United States and Canada (benefit from Japan and Vietnam markets), Australia (Canada and Mexico markets), New Zealand (Canada, Mexico, Japan and the USA markets), Vietnam and Malaysia (the USA, Canada and Mexico markets) will be able to benefit most from the ratifying of the TPP agreement. Mexico, in turn, already benefits from preferential tariffs with the major importers in the framework of existing trade agreements. In this regard, and taking into account the existing practice of applying export subsidies (under the agreement they will be abolished) Mexico in competition with Australia, New Zealand and Vietnam may lose its share in the markets of the USA, Canada and Japan. Chile is the only country that already has trade agreements with all TPP members.

According to the study of American experts commissioned by the US Ministry of agriculture, export and import of agricultural products under the TPP will increase by 9.2% in 2025 (compared to the baseline scenario, if the agreement is not ratified) [7]. An increase in export and import of the TPP countries is shown in table 4.

Table 4 – Growth of agricultural products export and import in the TPP countries (within the partnership) by 2025, billion dollars [7]

However, both the article and the study do not take into account the consequences of reducing non-tariff barriers within TPP and the multiplicative effect.

Mikhail Tomilov,
senior expert, Research Center for SCO and APR,
Khabarovsk State University of Economics and Law

References

1 Cimino-Isaaks C., Schott J.J. Trans-Pacific Partnership. Peterson Institute for International Economics, 2016. 355 p.

2 Mcminimy M.A. TPP: American Agriculture and the Trans-Pacific Partnership Agreement // https://fas.org/sgp/crs/misc/R44337.pdf

3 https://ustr.gov/sites/default/files/TPP-Benefits-for-US-Agriculture-Fact-Sheet. pdf

4 Hufbauer G.C., Cimino-Isaaks C. How will TPP and TTIP change the WTO system? // Journal of International Economic Law. 2015. № 3. P. 679-696.

5 World Trade Organization (WTO).World Tariff Profiles 2016 // https://www.wto.org/English/res_e/booksp_e/tariff_profiles16_e.pdf

6 Twomey M.J. Agriculture in the TPP. University of Michigan. // http://www. personal.umd.umich.edu/~mtwomey/econhelp/Agriculture_in_the_TPP.pdf

7 Burfisher M., Dyck J., Meade B., Mitchell L., Wainio J., Zahniser S., Arita S., Beckman J. Agriculture in the Trans-Pacific Partnership. USDA, 2014. // https://www.ers.usda.gov/webdocs/publications/err176/49379_err176.pdf

8 UN Comtrade. International trade statistics database. Available at: http:// comtrade.un.org