Rick's Beef: What's next for farmers?

President Donald Trump has moved to remove the US from the Trans Pacific Partnership Agreement. Photo / AP

If the uncertainty around Brexit last year wasn't enough, we now enter the unknown with United States President Trump now carrying out his election promises.

Last week the Chairman of Beef+Lamb James Parsons emailed farmers around NZ outlining his thoughts on the United States decision to withdraw from the Trans Pacific Partnership Agreement, his comments are:

"President Trump's decision to require the United States to withdraw from the Trans Pacific Partnership (TPP) is a disappointing one for sheep and beef farmers.

As currently drafted, TPP cannot enter into force without the US which is a significant blow for trade liberalisation in the Asia Pacific region in the short term.

"Ironically, the lost opportunity to our sector from President Trump's decision mostly lies outside of the US.

TPP would have had only a relatively minor positive impact on our trade with the US, due to existing low tariff rates faced by New Zealand beef and lamb in that market.

The real value of TPP to our sector was in reducing tariffs and creating a level playing field in high-value Asia Pacific markets, Japan in particular.

Due to the Japan-Australia Free Trade Agreement (FTA), Australian beef entering Japan enjoys a tariff rate that is 10 percentage points lower than that faced by competitors such as New Zealand and the US.

As a direct result, over 2015 and 2016 Australian beef exports to Japan have increased by 13 per cent, while those from New Zealand and the US have fallen by 10 and 11 per cent respectively."

What next?

While this is a major setback there are a number of possibilities for multilateral FTAs in the Asia Pacific.

Remaining TPP parties may revise their agreement to remove US concessions and press on with an agreement to show trade leadership.

The Regional Comprehensive Economic Partnership, which is under negotiation and includes (among others) New Zealand alongside ASEAN countries, China, India and Japan, also provides an opportunity to free up access and establish common trading rules in the Asian region.

NZ beef and lamb farmers wait with baited breath ...