By Todd Neeley , DTN Staff Reporter
OMAHA (DTN) — Backing out of the Trans Pacific Partnership (TPP), renegotiation of the North American Free Trade Agreement (NAFTA), an ongoing trade battle with China and resulting retaliatory tariffs against the United States are all trade policies that are costing U.S. farmers dearly, according to an updated Purdue University analysis released on Monday.
An initial analysis was completed by Purdue economists Maksym Chepeliev, Wallace E. Tyner and Dominique van der Mensbrugghe in October 2018. The updated study said a U.S. re-entry into TPP would turn a current agriculture trade loss into a gain. In addition, the study says that backing out of NAFTA and failure to implement the USMCA, would lead to an additional $12 billion in annual losses in agriculture export revenues.
After the U.S. pulled out of the TPP, the remaining 11 countries including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, negotiated the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
Speaking at a Farm Foundation event on Monday in Washington, D.C., Don Buckingham, an attorney with the Canadian Agrifood Policy Institute, said work done between the U.S. and Canada on trade agreements laid the groundwork for a possible re-entry of the U.S. into the TPP.
“Obviously it’s nice to be in the club,” Buckingham said.
“How do we determine a fair entry point? There is a market dynamic to take into consideration. A lot of provisions in the USMCA were first negotiated in TPP. In agriculture there is always sensitive sectors. It is always difficult. That may be where negotiation bogs down.”
The Purdue analysis said there still would be a significant benefit to the U.S. if it joined that partnership. If the U.S. continues its current trade stance, however, U.S. agriculture exports would continue to fall in the next four to five years.
“If the United States were to rejoin the TPP, the agreement would significantly benefit U.S. farmers — the loss of $1.4 billion would turn into a gain of $2.9 billion in additional agricultural exports,” the report said.
“If the current U.S. trade policy were to continue towards protectionism (i.e., with the U.S. withdrawal from TPP, with the global retaliatory tariffs and if the United States were to entirely withdraw from NAFTA), U.S. agricultural exports would drop by $21.8 billion. These negative trade impacts would be reflected in lower incomes for U.S. farmers, reduced agricultural land returns and farm labor displacement.”
The study said that, on average, the loss of those exports would lead to a reduction in income for workers in the agricultural and food sectors of about $4,000 per person.