May 29, 2015
The Trans-Pacific Partnership (TPP) and U.S. Agriculture
The Trans-Pacific Partnership (TPP) is a potential free trade
quotas (TRQs) are substantially lowered. A TRQ is a quota
agreement (FTA) being negotiated among 12 countries of
for a volume of imports at a lower tariff. When the quota is
the Asia-Pacific region: the United States, Australia,
reached, a higher tariff is applied on additional imports.
Brunei, Canada, Chile, Japan, Malaysia, Mexico, New
Zealand, Peru, Singapore, and Vietnam. The TPP
Existing tariff peaks within TPP countries exceed 20% in a
negotiations, which the United States joined in 2008, cover
number of product categories, and can be much higher.
a broad range of trade topics from government procurement
Examples include dairy and poultry imports into Canada;
to foreign investment to trade in services, to cite just a few.
bovine meat, rice, and dairy products into Japan; and
Negotiations over market access for agricultural products
Vietnamese tariffs across a number of food categories.
have figured prominently in the discussions as one of a
Figure 1 compares average applied tariffs on agricultural
number of agricultural topics under negotiation.
products in 2013 with TPP countries with which the United
States does not have an FTA and where higher average
Exports a Critical Pillar for U.S. Agriculture
tariffs on agricultural products prevail. An agreement that
results in lower tariffs and TRQs across the board should
Trade is vital for U.S. agriculture, absorbing about 20% of
tend to favor an increase in sales of U.S. farm products.
total agricultural production, with exports claiming a far
larger portion than that of the output of a number of
Figure 1. Applied MFN Tariffs, Agricultural Products
important commodity crops, including cotton, rice, wheat,
soybeans, almonds, and pecans, to cite a few. By adding to
the demand for U.S. farm products, exports support
commodity prices and contribute materially to higher farm
income. U.S. consumer demand for food is growing slowly,
while exports allow farm products to tap into higher growth
foreign markets. Given that some 95% of the world’s
population resides outside the United States, and that this
population controls 80% of the world’s consumer
purchasing power, the importance to U.S. agriculture and
food industries of capturing a share of the faster growth of
demand for food in developing countries is imperative.
Moreover the U.S. Department of Agriculture (USDA) has
pointed out that most of the expected increase in middle-

class households—those with real purchasing power parity
Source: World Trade Organization Tariff Profiles
incomes in excess of $20,000 a year—numbering some 300
Notes: Most Favored Nation (MFN) tariffs rates are normal non-
million between 2013 and 2023 is expected to occur in
discriminatory tariffs
developing countries. Furthermore, the Organization for
Economic Cooperation and Development projects that by
USDA Sees Potential Gains for U.S. Farm Exports
2030, 66% of the world’s middle class will reside in Asia.
In a study from October 2014, USDA modeled the effects
Tariff Reduction Could Favor U.S. Farm Exports
on agricultural trade by the year 2025 of a TPP agreement
that eliminated all tariffs and TRQs on agricultural products
The extent to which a TPP agreement might boost U.S.
as compared with a baseline scenario without a TPP
farm exports is difficult to quantify since the terms of an
agreement. Among its conclusions are the following:
agreement have not been finalized, nor have negotiating
1. In the baseline scenario of no-TPP agreement,
details been made public. But, there appears to be the
intraregional agricultural trade is projected to
potential for material gains for U.S. food and agricultural
expand by $12 billion, or 9%, in 2025 compared
interests. For one, the United States does not have an FTA
with 2014. The U.S. share of this increase
with Japan, the country with the second richest economy
amounts to $3.4 billion in 2025, a gain of 7%,
and the second largest population in the TPP group, nor
while U.S. imports from TPP countries also are
with Vietnam, which has the fourth largest population in the
projected to rise by $3.4 billion, an increase of
TPP and is projected to have the fastest economic growth.
8%.
Also, while TPP countries accounted for 42% of all U.S.
2. In the TPP scenario, agricultural trade among
agricultural exports during the reference period of 2010-
TPP countries expands by an additional $8.5
2012, applied tariff rates on imports of agricultural products
billion in 2025, or 6% above the no-TPP
are higher in a number of key TPP countries than those
outcome.
applied by the United States. This suggests there is potential
3. About one-third of the expansion in agricultural
for U.S. farm exports to expand if tariffs and tariff-rate
exports under the TPP scenario accrues to the
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The Trans-Pacific Partnership (TPP) and U.S. Agriculture
United States. U.S. exports increase $2.8 billion
agreement must deliver net trade benefits by delivering
more in 2025, or 5%, versus a no-TPP result.
greater access to foreign dairy markets, particularly Canada
4. U.S. agricultural imports are projected to climb
and Japan. Representatives of the American Sugar Alliance,
by an additional $908 million, or 2%, with TPP.
representing sugar production interests, have expressed
concern about opening the U.S. market to additional sugar
5. The TPP scenario projects Japan will absorb the
imports, whereas the Sweetener Users Association,
lion’s share of the increase in agricultural trade,
representing candy makers and other sugar-consuming
boosting its imports by $5.8 billion, or 14%.
industries, has advocated for expanding access to all TPP
A central assumption of the study is that all tariffs and
sugar markets, including the U.S. market.
TRQs will be eliminated. That outcome is far from certain,
Key Elements to Monitor in a TPP Agreement
and a less ambitious result could temper the gains that may
accrue to U.S. farm exports compared with the projections.
Japanese imports are projected to account for 70% of the
Any agreement to reduce or eliminate tariffs and TRQs may
agricultural trade gains in USDA’s TPP scenario. As such,
well be implemented progressively over time. To view the
the extent to which potential export gains are translated into
study, go to http://www.ers.usda.gov/publications/err-
actual opportunities to increase U.S. export sales may hinge
economic-research-report/err176.aspx.
substantially on the degree to which Japan agrees to remove
tariffs and TRQs on its “sensitive” products: pork, beef,
Meat, Grains, Dairy to Lead U.S. Farm Trade Gains
rice, wheat, barley, dairy products, and sugar.
The USDA study projects changes in U.S. farm exports and
Also important in achieving the export gains projected for
imports across broad commodity categories in 2025 under a
meat and dairy products, according to USDA, is the extent
tariff and TRQ elimination scenario versus a no-TPP
to which Canada agrees to reduce or eliminate its over-
agreement. The product categories that are projected to post
quota tariffs on dairy and poultry products that protect
the largest export gains are meat products, cereals, dairy
supply management regimes for these commodities, and the
products, and fruits and vegetables. Gains on the import
degree to which Vietnam lowers its import tariffs on meats.
side of the trade ledger are led by meat and dairy products
and are more limited in scope (see Table 1).
Beyond tariffs and TRQs, the removal of non-tariff
measures (NTMs) may facilitate additional growth in trade.
Table 1. Projected Increases in U.S. Farm Trade with
Sanitary and phytosanitary (SPS) measures are among the
TPP Countries in 2025 Versus No-TPP Baseline
most significant NTMs for agricultural trade and one that
Exports
$U.S. Millions
Percent Change
has been a topic of the negotiations. SPS measures include
actions taken to protect human, animal, and plant health.
Meat Products
$1,000
+11%
Such measures are consistent with countries’ obligations
under the World Trade Organization as long as they are
Cereals $664
+6.9%
science-based, implemented with adequate risk assessment,
Dairy Products
$580
+32.2%
and do not discriminate against foreign producers. But SPS
measures can also be disproportionate to actual risk levels
Fruits/Vegetables $221
+3.7%
and can be configured to shield domestic producers from
Total Agriculture
$2,827
+5.4%
foreign competition, or both, thereby suppressing trade. The
United Fresh Produce Association has identified NTMs as a
Imports


growing problem for fresh fruit and vegetable exports and
Meat Products
$247
+3%
has called for a timely dispute settlement process to resolve
such incidents. Others have called for rules that will
Dairy Products
$187
+20.5%
strengthen the role of science in resolving SPS disputes,
while still other voices have cautioned that new rules must
Fruits/Vegetables $10
+0.1%
not trample on national regulatory sovereignty.
Total Agriculture
$908
+2%
Another high-profile issue for TPP concerns geographical
Source: USDA Economic Research Service
indications (GIs). GIs protect the quality and reputation of
Farm Groups Mostly Supportive, But with Caveats
distinctive products from a particular region of a country.
U.S. dairy product manufacturers are keen to see that what
Numerous U.S. farm organizations and major commodity
they view as the overly broad application of GIs by the
groups have expressed support for concluding a TPP
European Union to food names U.S. companies consider to
agreement that significantly expands market access for
be generic or common—“feta” and “parmesan” are two
agricultural products. Among these are the American Farm
examples—will not impede U.S. exports in TPP markets.
Bureau Federation, North American Meat Institute, and
many others. In contrast, the National Farmers Union has
Mark A. McMinimy, mmcminimy@crs.loc.gov, 7-2172
warned against vague promises of market access, asserting

that some past free trade agreements have resulted in U.S.
IF10233
jobs being shipped abroad, thereby weakening the domestic
market that constitutes the largest outlet for U.S. farm
products. Major U.S. dairy groups have asserted that any
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