Agriculture leaders expressed disappointment over President Donald Trump’s decision Monday to pull out of a 12-country trade deal that would have boosted exports from San Joaquin Valley farmers.
Trump made good on a campaign promise by signing an executive order ending the United States’ participation in the Trans-Pacific Partnership, or TPP, a wide-reaching agreement that affected numerous industries, including agriculture.
Had Congress approved the pact, the American Farm Bureau estimated, California farmers of fruits and nuts could have reaped $562 million in sales through lower tariffs and the elimination of tariffs. Dairy producers could have potentially pulled in $53 million in added revenue.
Growers of almonds, walnuts, pistachios, pecans, citrus, tree fruit, dairy, vegetables (fresh and processed) and beef would have been affected by the trade agreement.
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The partnership included Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States.
“It’s a disappointment,” said Jim Zion, managing partner of Meridian Growers in Clovis, a grower and marketing company specializing in tree nuts. “Trade is a big issue for ag.”
Under TPP, the agriculture industry was excited about several key markets, including Japan and Vietnam. Although Japan already is the U.S.’ fourth-largest export market, it had agreed to reduce or eliminate its high tariffs on several goods, including beef, poultry, fresh fruits and barley.
Vietnam, an emerging trade partner, would have eliminated tariffs that were as high as 35 percent over the next three to six years.
Zion said that if Trump’s strategy is to negotiate individual deals with the TPP countries, it better happen sooner than later because “these crops are only getting bigger.”
California almond, pistachio and walnut growers export from 60 percent to 70 percent of their crops.
California’s citrus industry also was expected to see an increase in trade, especially with Vietnam. That country was expected to phase out tariffs on several citrus products, including a 30 percent tariff on grapefruit, 25 percent tariff on lemons and 27 percent on oranges.
“We were looking forward to seeing a reduction in some tariffs and the complete phasing out others,” said Joel Nelsen, president of California Citrus Mutual in Exeter. “But this wasn’t a surprise.”
Nelsen said that it was clear from the campaign that neither Trump nor his chief rival, Hillary Clinton, wanted TPP to survive. What is important now, Nelsen said, is to make sure the new president understands how important exports are to California agriculture. Total food and agriculture exports for California were valued at $21.5 billion in 2014.
“The truth is we are in uncharted water right now, so we need to be paying close attention to what is being said and done, and how others are responding,” Nelsen said.
Daniel Sumner, an agricultural economist at University of California, Davis, said one possible outcome of abandoning TPP is for the U.S. to try to negotiate individual deals with the Trans-Pacific partners. He added that Vietnam and its growing middle class is becoming a more attractive destination for California agriculture products.
“Vietnam could prove to be very useful,” Sumner said.
As for attempting to renegotiate the North American Free Trade Agreement, another Trump campaign promise, Sumner said that could prove difficult. Canada is the top export market for California agricultural products and Mexico is also a major buyer.
“When you unilaterally open a trade agreement that has been successful, it can be very scary,” Sumner said. “It is a huge market for California.”