Mon, Mar 03, 2014 - Page 8 News List

Prep agriculture sector before TPP

By Du Yu 杜宇

The Trans-Pacific Partnership (TPP) talks between the US and Japan have once again been delayed due to agricultural issues.

Judging from US President Barack Obama’s speech at Michigan State University on Feb. 7, in which he said that the US will adopt a series of measures to promote agricultural exports, the US will continue to put pressure on Japan and demand that it remove all customs duties.

Whether the Japanese government will make major concessions on the duties for rice, beef, pork, wheat, dairy products and sugar will be crucial to reaching an agreement.

Taiwan’s average import duty on agricultural products is 13.88 percent, while in Japan it is 21 percent. By comparison, the same figure for the US is 4.7 percent, for Australia 1.3 percent and for New Zealand 1.4 percent, which places Taiwan and Japan in a group of more protectionist countries.

If Taiwan wants to join the TPP, it must, in addition to preparing itself to remove protectionist duties on agricultural products and open up the domestic market, also avoid repeating the mistakes of past trade talks.

First, prior to participating in trade cooperation talks, a country must assess the possible impacts on industry and prepare a negotiation strategy based on this assessment to maximize benefits and minimize losses.

Although common international models for analyzing the impact of regional trade agreements — such as the Computable General Equilibrium model, the Global Trade Analysis Project model and the Gravity model — also will be used in Taiwan, the nation does not have the detailed basic data for individual industries that are required for using these models that Japan, the US and South Korea possess.

In particular, basic agricultural, forestry, fishery and livestock data are incomplete, which often results in major discrepancies between assessments and the actual situation. The result is distrust among industrial circles and negative consequences when planning followup policy.

The same models used with different parameters and assumptions create different results, which leaves room for academics and political parties with different viewpoints to manipulate the results. One example is the assessment of the impact of the free economic pilot zones on the agricultural industry, which can vary from one end of the spectrum saying that it only will have a minor impact, to saying that it could bring losses upward of NT$180 billion (US$5.94 billion).

This is why the authorities, in addition to creating a complete record of the data required for analysis, must invite academics and experts to carry out deeper analysis of any preliminary conclusions to be able to make appropriate adjustments to minimize the mistakes.

Second, prior to planning a strategy for the talks and to maintain secrecy and avoid unnecessary complexity, the government must communicate fully with the concerned industrial organizations. Since there is not sufficient industrial data, it would be easy to misjudge the situation and spark an industrial backlash after the talks, which would add to the uncertainty when trying to pass an agreement. The best example of this is the controversy surrounding the cross-strait service trade agreement.

To deal with this problem, the competent authorities should communicate preliminary ideas formed in consultation with academics and experts to agricultural organizations and promote two-way communication, while also including these organizations in an advisory group to form a more complete policy decision.

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