World

Trump trade czar admits TPP “problem”

By AAP Newswire

Donald Trump's trade chief Rob Lighthizer has admitted American farmers face a "real problem" competing with Australia and other Trans-Pacific Partnership member nations selling beef, wheat and other products to the key market of Japan.

The US president, who made pulling out of the 12-nation TPP a key pre-election promise, lived up to it by nixing US involvement in the massive trade pact on just his third day in the White House.

A US Senate hearing in Washington DC involving US Trade Representative Robert Lighthizer this week painted a grim picture for American farmers struggling because they face higher tariffs selling to Japan compared to TPP member countries including Australia, Canada and New Zealand.

US farmers will also suffer after Japan, a TPP member, struck a major trade agreement with the European Union.

"As you know it's not just what's happening in the market now it's what is going to happen when TPP is fully implemented because we have a whole variety of competitors there, but also the European agreement," Lighthizer told Tuesday's Finance Committee hearing.

"We have a real problem.

"We have a situation that is not good now and it is going to get bad very quickly."

Trump has vowed to pursue bilateral trade agreements rather than TPP-like multi-country pacts.

Lighthizer said a US-Japan free-trade agreement was a "very high priority", although it could "take a while".

Lighthizer, noting the urgent need to attempt to level the trade playing field, floated the prospect of striking a deal on agriculture with Japan before sealing the entire free trade agreement.

Montana Senator Steve Daines told Lighthizer that barley growers from his agricultural-focused state visited his office to show him contracts they lost in Japan.

"We are now behind in Japan because our other allies here have signed agreements and are moving forward and are going to receive the benefits of the tariff reductions," Daines said.

"It is going to put US producers at a significant disadvantage.

"My barley folks were in talking to me yesterday and literally showed me contracts they lost in Japan."

US Wheat Associates warned in December America's 53 per cent market share in Japan faced "an imminent collapse" from the TPP and the US National Cattlemen's Beef Association said its exports to Japan were under threat with Australian beef producers benefiting from TPP tariff cuts.

After Trump pulled out of the TPP, Japan and Australia refused to let it die and rallied the other member nations to form the TPP-11, known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.