Does Greater Trade In Beef With Japan Advance U. S. Interests?

At the Wall Street Journal Bill Horan calls for ratification of the Trans-Pacific Partnership Agreement to help American beef producers:

If TPP passes, annual farm exports will increase by $7.2 billion in the next 15 years, according to estimates by the U.S. International Trade Commission. The benefits would spread across American agriculture, but here are a few of the biggest bumps: $721 million in new deliveries of fruits, vegetables and nuts to Vietnam; $840 million in new beef exports to Japan; $1.2 billion in new dairy sales to Canada.

Like the United States Japanese agriculture has a byzantine maze of tariffs, price supports, income subsidies, and quotas. Present Japanese agricultural policy is summarized here. The agricultural reforms to which Japan has agreed are outlined here.

There are several things that should be apparent from scrutinizing the links above. The first is that the TPP is not free trade. It is a change in the structure of managed trade. Dragooning Ricardian trade theory to support the TPP is either outright ignorant or deliberate misdirection.

I suspect that Mr. Horan’s estimate of the likely increase in U. S. beef exports to Japan that would result from the TPP are overly optimistic. Present U. S. beef exports to Japan are still lower than they were prior to the SBE scare—some increase is to be expected in the ordinary course of events simply due to the easing of restrictions imposed after the scare. Nothing in the TPP would protect U. S. producers from another politically-motivated scare like the one of a dozen years ago.

Additionally, Japan’s population is actually declining and is expected to do so for the foreseeable future. Unless the per capita consumption of imported beef is expected to rise (something I find unlikely), while Japan will remain an important market it’s unlikely to be a growth market.

Note, too, that very few of the reforms to Japanese agricultural policy take place immediately. Most are phased in slowly and will occur when President Obama is safely out of office if ever. U. S. tariffs and quotas on light trucks on the other hand will be removed immediately.

The TPP picks winners and losers. Beef producers might be winners. Truck manufacturers will be losers.

I don’t know how to assess the benefit that the TPP might provide to U. S. ranchers. There are more than a half million of them. Most U. S. feed lot operations, slaughter facilities, and packing operations are controlled by just four companies: Tyson, Cargill, JBS, and National Beef Packing. They account for nearly 90% of the market and they will definitely benefit. All are substantial political donors. I leave it to the interested reader to analyze the political impact of the TPP.

Beef production is a major source of methane emissions (2.2% of the total—equivalent to about 24 million autos). And that’s just in volume of emissions. The impact of those emissions is probably greater since methane is a bigger problem than carbon dioxide.

I do not know how you reconcile the Obama Administration’s agonistic remarks about global warming (Barack Obama, John Kerry) with wanting more beef production.

More generally, does increasing beef exports to Japan further U. S. interests? I can see how it’s in Cargill’s interests. I don’t think the case is nearly so strong that it’s in U. S. interests.