US, Japan sign trade agreement

U.S. Secretary of Agriculture Sonny Perdue called the signing of the new United States-Japan Trade Agreement “a particularly big win for our farmers and ranchers.”

“This agreement between the United States and Japan is a better deal for the entire U.S. economy,” Perdue said in a press release Sept. 25.

Perdue said when he visited Japan in May for the G20, he made it clear Japan is the U.S.’ best customer, but he didn’t feel the relationship was reciprocal at the time.

“This agreement helps level the playing field,” Perdue said. “I thank President (Donald) Trump and Ambassador (Robert) Lighthizer for delivering on their promise to open markets around the world for America’s farmers and ranchers.”

According to the USDA, the U.S.-Japan Trade Agreement will provide America’s farmers and ranchers enhanced market access in our third largest agricultural export market. When implemented, this agreement will enable American producers to compete more effectively with countries that currently have preferential tariffs in the Japanese market. The deal President Trump is delivering will provide our farmers, ranchers, and agribusinesses with market access for high quality U.S. food and agricultural products to 127 million Japanese consumers.

In the agreement, Japan has committed to providing substantial market access by eliminating tariffs, enacting meaningful tariff reductions, or allowing a specific quantity of imports at a low duty (generally zero) to American food and agricultural products.

The USDA said of the $14.1 billion in U.S. food and agricultural products imported by Japan in 2018, $5.2 billion were already duty free. Under this first-stage initial tariff agreement, Japan will eliminate or reduce tariffs on an additional $7.2 billion of U.S. food and agricultural products.

Products that will have reduced tariffs may include: fresh beef, frozen beef, fresh pork and frozen pork. Those products that will have tariffs eliminated may include: almonds, blueberries, cranberries, walnuts, sweet corn, grain sorghum, food supplements, broccoli and prunes. Other products that will benefit from staged tariff elimination will possibly include: wine, cheese and whey, ethanol, frozen poultry, processed pork, fresh cherries, beef offal, frozen potatoes, oranges, egg products and tomato paste.

For some products, preferential market access will be provided through the creation of Country Specific Quotas, which provide access for a specified quantity of imports from the United States at a preferential tariff rate, generally zero. CSQ access will cover: wheat, wheat products, malt, glucose, fructose, cornstarch, potato starch and insulin.

Exports to Japan of wheat and barley will benefit from a reduction to Japan’s “mark up” on those products. Japan’s imports of U.S. wheat and barley were valued at more than $800 million in 2018.

This agreement provides for the limited use of safeguards by Japan for surges in imports of beef, pork, whey, oranges and racehorses, which will be phased out over time.

Statements by livestock and crop organizations on the agreement 

Beef

National Cattlemen’s Beef Association President Jennifer Houston said Japan is the No. 1 export market for U.S. beef.

“The only way for U.S. beef producers to remain competitive in our leading export market is to remove trade barriers through a bilateral trade agreement with Japan,” Houston said in a statement. “NCBA thanks President Trump for his continued support in removing trade barriers on U.S. beef, and we encourage the United States and Japan to sign and implement the bilateral trade agreement as soon as possible.”

Houston called the announcement an important step forward for the U.S. beef industry. U.S. beef producers have benefitted the past few years from growing beef demand in Japan.

“While Japanese consumers enjoy high quality U.S. beef, they unfortunately pay a higher price for U.S. beef due to the massive 38.5% tariff,” Houston said. “Removing that tariff allows more Japanese consumers to enjoy more U.S. beef at a more competitive price. Today’s announcement is welcome news for American families who produce U.S. beef and Japanese families who purchase it.”

Houston praised the Trump administration for prioritizing trade negotiations with Japan.

“President Trump answered the call and took on the difficult task of expanding access to Japan for U.S. beef exports,” she said. “America’s ranchers are incredibly thankful for the leadership of President Trump and the yeoman’s work of Ambassador Lighthizer and his team whose diligent work and tough negotiating will benefit generations of U.S. beef producers.”

Texas and Southwestern Cattle Raisers Association President Robert McKnight, Jr., issued his own response to the agreement with Japan.

“We are elated that today’s announcement of a trade agreement with Japan includes a reduced tariff on U.S. beef. Japan is the largest buyer of U.S. beef exports and the third-largest buyer of Texas beef despite a 38.5% tariff,” McKnight said. “The excessive tariff left U.S. beef producers vulnerable to foreign competitors with lower tariff rates. High tariffs were also costly for Japanese consumers who had to pay substantially more to enjoy U.S. beef.”

McKnight said this bilateral trade agreement with Japan is an achievement that will benefit American cattle producers for decades to come.

Sorghum

Stockton, Kansas, farmer and National Sorghum Producers Chairman Dan Atkisson said the agreement comes at a pivotal time and is welcomed news for sorghum producers.

“We applaud negotiators from both countries for their hard work and foresight to build more opportunities for U.S. agriculture producers,” Atkisson said. “Japan has become a stable market for our farmers with growing interest from the consumer and feeding industries, and we look forward to increased market access, duty free, achieved through this agreement.”

Atkisson said sorghum producers feel this relationship with Japan is an important step forward in further expanding trade relationships with southeast Asia where there are valuable market growth opportunities.

Japan imported close to 237,000 metric tons of U.S. sorghum this marketing year, according to NSP. The majority of grain is utilized as animal feed, primarily for poultry. The U.S. is also the dominant supplier of sorghum seed to Japan, exporting 81 metric tons of treated seed in 2017.

Corn

NCGA President Lynn Chrisp called Japan a “strong trading partner and friend for American agriculture.”

Japan, according to Chrisp, is now the second largest purchaser of U.S. corn.

“NCGA has long-advocated for an agreement with Japan and, with many farmers struggling amid challenging times in agriculture, this is very welcome news,” Chrisp said. “While we await further details, it seems this phase one agreement will deliver for corn farmers and build upon our successful partnership with Japan.”

Pork

National Pork Producers Council President David Herring and President-Elect Howard “A.V.” Roth joined President Trump for the signing of the agreement in New York during the United Nations General Assembly meeting, Sept. 25.

The trade agreement will once again allow U.S. pork producers to compete on a level playing field in Japan.

“I am honored to represent U.S. pork producers today at a signing ceremony so important to my fellow hog farmers around the country,” said Herring, a pork producer from Lillington, North Carolina. “We’ve seen market share declines in Japan, historically our largest value export market, since the start of the year when international competitors gained more favorable access through new trade agreements. Once implemented, the agreement signed today puts U.S. pork back on a level playing field with our competitors in Japan.”

Dermot Hayes, an economist at Iowa State University, estimates exports to Japan could grow from $1.6 billion in 2018 to more than $2.2 billion over the next 15 years under market access terms included in the agreement.

U.S. pork is highly dependent on exports, shipping more than 25% of total production to foreign markets. Other NPPC trade priorities include ratification of the U.S.-Mexico-Canada agreement, which preserves zero-tariff pork trade in North America, and resolving trade disputes with China that will enable U.S. pork producers to capitalize on an unprecedented sales opportunity with the world’s largest pork-consuming nation.

Kylene Scott can be reached at 620-227-1804 or [email protected].