At the request of the Office of the Chief Economist (OCE) of the United States Department of Agriculture, officials from Virginia Tech’s Center for Agricultural Trade developed a global model to determine the likely impacts of the Trans-Pacific Partnership (TPP) on U.S. and international dairy trade.
The OCE became interested in working with the Center for Agricultural Trade because of previous work produced by The Center’s Director, Associate Professor Jason Grant, and The Center’s Research Head, Professor Everett Peterson.
“My previous tariff line modeling of U.S. specialty cheese quotas and Peterson’s extensive simulation work were particularly significant,” said Grant. “Our proximity to Washington, D.C., and our port in Hampton, Virginia, have facilitated our relationship with OCE and other policymakers.”
Taking into account current tariffs and trade regulations, income and population growth rates, and expected policy changes, Grant and Peterson projected outcomes to the year 2028 for a scenario in which the U.S. ratifies the TPP, and one in which the U.S. fails to ratify.
“We found that by joining the TPP, U.S. producers would gain lucrative access to previously out of reach dairy markets in Japan and Canada,” said Grant. “U.S. dairy exports would be much higher than if the U.S. failed to ratify, which would mean increased production possibilities for U.S. dairy producers.”
Results from the study, recently included in the OCE’s report, “Why Trade Agreements Matter: The Case for U.S. Dairy,” showed that participating nations would benefit from lowered or eliminated tariffs, or from increased import quantities permitted into certain countries.
“As trade relationships shift among participating TPP nations, U.S. dairy producers will suffer losses if the U.S. fails to ratify the agreement,” Grant stated, “and other countries such as Australia and New Zealand will forge ahead without the U.S.”
From a U.S. dairy consumer standpoint, findings proved largely inconsequential. However, Grant and Peterson expect any small losses to consumers to be significantly offset by the benefits U.S. producers would find under the TPP.
According to experts Grant and Peterson, the U.S. dairy market has everything to gain by joining the TPP, and with this analysis, dairy producers know what to expect in either scenario. All that remains is to see whether there is enough political support to pass the mega-regional trade deal.