TPP Deal Disappointing for Sugar but Trade Talks Should Now Turn to Ag

There are "some substantial missed opportunities” from the Trans-Pacific Partnership deal, especially for sugar, Senator Matt Canavan said in a speech in the Senate last night.

"Tariffs and protections on sugar will be far from eliminated under the deal,” Senator Canavan said. “This is a regrettable outcome … to the Australian sugar industry and to the broader world because the significant gains that would have otherwise flowed from increased world trade have been ignored and neglected.
“Total Australian exports of sugar were valued at $1.5 billion in 2014, and around one third of these exports, valued at an estimated $510 million, went to TPP countries.
"Analysis by the US Department of Agriculture before the TPP deal was reached showed that the removal of barriers to sugar trade had the potential to increase trade in sugar between TPP members by a whopping 48 per cent – the second biggest potential increase in any agricultural product. 
“TPP market access gains for Australian sugar producers and exporters include an additional 65,000 tonnes of access to the United States, and the US will also provide Australia with 23 per cent of future additional WTO quota allocations. Australia’s exports to the US are likely to grow from around 100,000 tonnes a year to 200,000 tonnes.
“While these and other changes are welcome, they are far from the potential gains that could have been achieved, and they do little to amend the distorting impact of the US sugar program.”
Senator Canavan said he recognised that Australia’s negotiating team did all they could to get the best outcome for Australia.
“But, in the overall scheme of things, the gains, in agriculture in particular, were not nearly as large as we would have hoped.
“Global trade in agriculture is the most distorted sector in world trade. These distortions in world agriculture and food markets mean that Australian farmers, as well as those in many developing countries, are unfairly disadvantaged.
"Previous economic modelling has shown that agriculture and food would deliver more than 60 per cent of the potential gains from trade liberalisation, a remarkable result given that agriculture accounts for less than 10 per cent of global trade."
The Queensland Senator has called for a new round of world trade negotiations focused on agriculture.
“We should start in agriculture because that is where the largest potential gains lie and that is where developed countries have the most to gain,” Senator Canavan said.
He contrasted this focused approach with the failed Doha round of trade talks, which had “rested on the big idea of an all-inclusive grand bargain”.
“I would like to suggest a different approach. I believe we should return to a renewed focus on achieving progress in discreet areas of trade reform, not shooting for the stars or the grand bargain. This would concentrate minds on the specific gains in particular areas.
“We should start in agriculture because that is where the largest potential gains lie and that is where developed countries have the most to gain.
“Some may call this approach too simplistic and naïve but I would argue that it would return the World Trade Organization (WTO) to a successful model that delivered results previously in telecommunications, intellectual property and biosecurity.”
Senator Canavan said the best template for this approach is the Agreement on Textiles and Clothing.
“Reform of quota-restricted trade in textiles seemed impossible but, during the Uruguay Round, WTO members signed the Agreement on Textiles and Clothing, giving a staged removal of quantitative restrictions over time.
“This focused approach has worked in the past. Why can’t we make it work for agricultural products, like sugar for example?”

NOTE: A full copy of the speech is available here:

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