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Agriculture Americas

US farmers, ethanol exporters, eye uplift from TPP trade deal

US farmers are eyeing a big potential uplift in grain and oilseed exports to a diversified export market after the government agreed the outline of a new trade deal with eleven Pacific-fronting partners which will slash import tariffs across a swathe of goods and services.

The Trans Pacific Partnership will cut or scrap tariff barriers between the US and Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. China, which currently dominates US agricultural exporters’ overseas demand, is conspicuously absent from the new deal.

Grain exports could jump 11% if the deal is ratified by Congress in the next three months, according to the US Grains Council. The White House meanwhile touted the eradication of tariffs of up to 35% on US soybean exports as another major achievement of the deal for US exporters.

Chemicals are also among the classes of goods listed under the agreement, meaning US ethanol exporters could benefit from liberalised trading arrangements. Vietnam for example has a national E5 mandate pending by the end of this year, with an array of domestic producers struggling against high costs. Recent Brazilian gasoline tax hikes have already sharpened US exporters’ price advantage to unprotected Asian markets grappling with increasingly uncompetitive domestic production economics.

Progressive tariff elimination between the US and Singapore following a 2003 free trade agreement will mean the new deal looks to hold little advantage for Neste’s already buoyant renewable diesel exports from Singapore to the US. Malaysian biodiesel exporters however would benefit from tariff elimination after they lost tariff free access to the US under the GSP arrangement in 2013.

“Our priorities in these talks have been focused on the broad goal of securing increased market access for U.S. grains and ethanol and ensuring that existing access remains open. That means lasting tariff relief, sanitary and phytosanitary provisions that will reduce the impact of non-tariff barriers, and meaningful global progress on the synchronous approval of biotech events,” said Grains Council president and CEO Tom Sleight.

MS – 05/10/2015

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