TPP: the agri boon that never was

President Trump may have stuck to his campaign promise to kill the Trans-Pacific Partnership, but he also delivered a stiff blow to American agriculture groups and farmers.

Back in June, then presidential nominee Donald Trump called the Trans-Pacific Partnership a “disaster” being “pushed by special interests who want to rape our country.”

On Monday, following through with his campaign promise to kill the deal, he signed an executive action withdrawing the US from negotiations for the 12-country trade agreement.

With a stroke of a pen Trump delivered a major blow to the agriculture industry, leaving a range of industry trade groups rightly disappointed and robbing US farmers of a desperately needed lift.

According to an analysis from the non-profit American Farm Bureau Federation, the TPP could have provided a $4.4 billion annual boost to net farm income and a $5.3 billion jump in net exports from the US to the TPP countries.

That could have helped rescue many American farmers as incomes continue to suffer. Net cash farm income and net farm income declined in 2016 – by an expected 14.6 percent to $90.1 billion and 17.2 percent to $66.9 billion, respectively – for the third consecutive year, according to USDA numbers.

Dennis Gartman, a capital markets expert who publishes the The Gartman Letter, told me this week that while he voted for Trump because he thought he was the “lesser of two evils,” he adamantly opposed the withdrawal from the TPP.

“What scares me the most about Trump is his antagonism towards freer trade,” Gartman said. “We are supposed to be the great promotor and beneficiary of freer trade and to cast away the TPP was tremendously ill-advised and much too fast of a decision.”

Land values, export trade and prices will all suffer as a result, he said, noting that while the impacts on private capital would be difficult to measure and would likely impact investment decisions at the margins, “there’s no way you can see this as anything more than detrimental.”

In addition to the AFBF, US industry bodies representing the fruit, dairy and pork sectors had spoken in favor of the deal. The TPP would have slashed tariffs for American imports and exports, opening trade up with the other countries involved: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam.

“American agriculture is virtually always a winner when trade agreements remove barriers to US crop and livestock exports,” AFBF president Zippy Duvall wrote in response to Trump’s action.

The National Pork Producers Council wrote on a webpage supporting the TPP prior to Trump’s latest action that “competitor countries [would] leap at the opportunity to fill the void if the United States rejects the agreement.”

Similarly, the National Milk Producers Federation and the US Dairy Export Council noted in a statement this week that the rejection “puts the US agriculture sector at a competitive disadvantage if we don’t pursue our own initiatives.”

In the hopes of salvaging some of the progress made, the dairy groups urged the Trump administration to pursue new trade opportunities in the Pacific Rim and with Mexico, suggesting bilateral agreements with Japan, Vietnam and others in Southeast Asia be made as soon as possible.

A main argument from Trump and other critics was that the TPP would lead to further losses of American jobs. But while the move may look like a bold gesture to stick to campaign promises and ‘protect the American worker’ – a questionable link at best – the deal already faced substantial hurdles before passage.

But whether or not the TPP was already dead in the water, Trump has nailed the coffin shut, ignoring the pleas of agriculture industry bodies and the continued struggles of US farmers.