Today (September 25, 2019), President Trump and Japanese Prime Minister Abe signed a trade agreement that many in agriculture had been asking for. Various agriculture commodity groups welcomed the news.
Secretary Perdue Statement on Signing of US-Japan Trade Agreement
Washington, D.C. (USDA-September 25, 2019) – U.S. Secretary of Agriculture Sonny Perdue issued the following statement regarding the signing of the new United States-Japan Trade Agreement:
“This agreement between the United States and Japan is a better deal for the entire U.S. economy, but is a particularly big win for our farmers and ranchers. When I visited Japan in May for the G20, I made it clear that the U.S. is Japan’s best customer and we felt that relationship was not reciprocal. This agreement helps level the playing field. I thank President Trump and Ambassador Lighthizer for delivering on their promise to open markets around the world for America’s farmers and ranchers.”
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 U.S.-Japan Trade Agreement, Japan has committed to provide substantial market access to American food and agricultural products by eliminating tariffs, enacting meaningful tariff reductions, or allowing a specific quantity of imports at a low duty (generally zero). Importantly, the tariff treatment for the products covered in this agreement will match the tariffs that Japan provides preferentially to countries in the CP-TPP agreement.
KEY ELEMENTS: U.S. AG EXPORTS TO JAPAN
Out 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.
Tariff Reduction:For products valued at $2.9 billion, Japan will reduce tariffs in stages. Among the products benefitting from this enhanced access will be:
- fresh beef
- frozen beef
- fresh pork
- frozen pork
Tariff Elimination:Tariffs will be eliminated immediately on over $1.3 billion of U.S. farm products including, for example:
- sweet corn
- grain sorghum
- food supplements
Other products valued at $3.0 billion will benefit from staged tariff elimination. This group of products includes, for example:
- cheese and whey
- frozen poultry
- processed pork
- fresh cherries
- beef offal
- frozen potatoes
- egg products
- tomato paste
Country Specific Quotas (CSQs):For some products, preferential market access will be provided through the creation of CSQs, 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 products
- corn starch
- potato starch
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.
Safeguards: This agreement provides for the limited use of safeguards by Japan for surges in imports of beef, pork, whey, oranges, and race horses, which will be phased out over time.
KEY ELEMENTS: JAPAN AG EXPORTS TO THE UNITED STATES
The United States will provide tariff elimination or reduction on 42 tariff lines for agricultural imports from Japan valued at $40 million in 2018. Products include:
- certain perennial plants and cut flowers
- green tea
- chewing gum
- certain confectionary products
- soy sauce
The United States has also agreed to modify its global WTO tariff rate quota for imports of Japanese beef, enabling Japanese beef producers to compete for a larger share of the global TRQ quantity.
Farmers Commend Agreement on Japanese Trade Deal
(AFBF-September 25, 2019) — The United States and Japan today announced they reached an agreement on a trade deal that further opens markets for both countries. Agriculture is among the biggest beneficiaries. The following statement may be attributed to American Farm Bureau Federation President Zippy Duvall:
“Today’s announcement that the two countries have reached an agreement and have completed agricultural negotiations is a positive step for America’s farmers and ranchers.
“Japan is American agriculture’s fourth-largest export destination and vital to the livelihood of hundreds of thousands of farms and the families who live on them. We export nearly $13 billion a year in agricultural products to Japan, even as we continue to face steep tariffs on many exports.
“This agreement, once signed, will lower tariffs and put U.S. farmers and ranchers on a level playing field to compete in Japan with countries that participate in the Trans-Pacific Partnership. That’s good news.
“The time for trade wars has come and gone. We are thankful the administration has reached this deal and we urge trade negotiators to achieve many more like it. Farmers and ranchers need to get back to doing what they do best: feeding a hungry world that needs what they produce.”
The US and Japan have reached an agreement on agricultural and industrial tariffs and digital commerce. While the agreement itself is not yet finished, a statement explaining the agreement was signed Sept. 25, 2019.
Under the agreement, Japan will place the same level of agricultural tariffs on U.S. goods as it places on CPTPP countries and the EU. By way of example, the 38.5% tariff on U.S. beef will fall to the 26% placed on beef from Australia, Canada and the EU. Some other foods such as duck, geese, turkey peaches, melons and more would enter duty-free.
The Japanese Parliament is expected to approve the agreement later this fall. It may take effect as early as Jan. 1, 2020.
There is no action by the U.S. Congress necessary, as this is not a full trade agreement that involves substantive changes to existing U.S. law.
Many other issues, contained in a “Phase 2” negotiation, will be dealt with in future talks with Japan.
More information can be found here: https://www.fb.org/market-intel/japan-u.s.-agriculture-agreement-could-help-u.s.-catch-up-to-global-competi.
Source: American Farm Bureau Federation
NCBA Praises Important Step Forward in Trade with Japan
WASHINGTON (NCBA-September 25, 2019) – National Cattlemen’s Beef Association (NCBA) President Jennifer Houston issued the following statement in support of a bilateral trade agreement between the United States and Japan that will lower Japan’s massive tariffs on U.S. beef:
“Japan is the number one export market for U.S. beef, accounting for one quarter of our exports. 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. 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 hailed this announcement as an important step forward for the U.S. beef industry. “For the past few years, U.S. beef producers have benefited greatly from growing demand for U.S. beef 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 percent tariff. 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. 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.”
In 2018, Japanese consumers purchased $2.07 billion of U.S. beef. Currently, U.S. beef faces a massive 38.5 percent tariff in Japan, while our competitors from Australia, Canada, Mexico, and New Zealand face a 26.6 percent tariff. Leveling the playing field in Japan is a top priority for the National Cattlemen’s Beef Association.
U.S. Dairy Industry Encouraged by Interim Japan Trade Deal, Urges U.S. to Complete the Job in Negotiations to Come
ARLINGTON, VA (NMPF-September 25, 2019) — The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) thanked the U.S. government for its work to reach an interim agreement with Japan that will deliver improvements in market access for the U.S. dairy industry, while noting that the work to secure a sufficient competitive landscape in Japan for dairy is not finished.
NMPF and USDEC look forward to reviewing with their members the details of this first stage of a trade agreement with Japan to take advantage of the new opportunities it will provide on a near-term basis while continuing to work with the Administration to secure the additional elements that are still needed to ensure a strong final dairy package in a comprehensive agreement.
“This enhanced access into the Japanese market is welcome news. Japan represents a rapidly growing market, and without a trade deal, our competitors are poised to seize valuable market share from U.S. dairy,” said Tom Vilsack, president and CEO of USDEC. “This first stage of a US-Japan agreement will improve upon today’s status quo, which has been unsatisfactory ever since Japan’s treaties with the CPTPP nations and the EU went into effect. To continue that progress toward closing the competitiveness gap with both CPTPP and EU suppliers, it’s essential that the U.S. secure further market openings and assurances in the second stage of negotiations with Japan to best position the U.S. to compete against all of our major competitors in Japan.”
“This interim trade agreement with Japan is welcome news for farmers across the U.S. who have seen their incomes damaged by trade disputes,” said Jim Mulhern, president and CEO of NMPF. “Today’s news is not the end of the road though; it’s the first leg of the journey. We thank America’s trade negotiators for their pursuit of a deal aimed at benefiting our dairy farmers and expanding international markets for their high-quality milk. To reap those full rewards and ensure the U.S. is able to best compete in the Japanese market, the subsequent stage of negotiations must secure further inroads into Japan, building upon what our key competitors – the European Union and New Zealand – have secured there.”
NMPF and USDEC agree with what Ambassador Lighthizer told the House Ways and Means Committee during his testimony in June: “You cannot treat your best customer worse than you treat people from all these other countries in Europe and all the other TPP countries.”
Last month, USDEC and NMPF coordinated a letter signed by 70 dairy companies, farmer-owned cooperatives, and associations to the United States Trade Representative and the U.S. Secretary of Agriculture asking the U.S. government to move swiftly to finalize a strong trade deal with Japan and secure critical market access for the U.S. dairy industry. The objectives outlined in that letter remain the industry’s expectation for a comprehensive agreement with Japan.
The U.S. exported $270 million in dairy products to Japan in 2018 with room for further growth. However, without a strong trade agreement that addresses the inequalities in market access granted to our competitors by the Japan-EU and CPTPP agreements, a 2019 USDEC study found that the U.S. risked losing $1.3 billion in exports over a decade, costing dairy farmers $1.7 billion in farm income.
NCGA: U.S.-Japan Trade Agreement Bright Spot for Agriculture
WASHINGTON (NCGA-September 25, 2019) — The National Corn Growers Association welcomed the news of a trade agreement between the United States and Japan that will increase market access for American agriculture products in Japan. NCGA President Lynn Chrisp made the following statement.
“Japan has been a strong trading partner and friend for American agriculture, 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. While we await further details, it seems this phase one agreement will deliver for corn farmers and build upon our successful partnership with Japan.”
NCC Applauds Signing of US-Japan Trade Deal
Under the agreement, frozen U.S. poultry will be among the agricultural products that will benefit from staged tariff elimination.
“Under the U.S.- Japan Trade Agreement, frozen chicken products will receive favorable tariff reductions enabling our products to compete more effectively with those countries in the Trans-Pacific Partnership,” said National Chicken Council President Mike Brown.
“While final details regarding agriculture still need to be worked out, today’s signing is welcome news and we would like to thank President Trump, Secretary Perdue and Secretary Lighthizer for their work negotiating trade deals that stand to benefit U.S. chicken.”
According to USDA, U.S. chicken exports to Japan in 2018 were 19,265 metric tons valued at $32.5 million. Fully removing tariffs would stand to benefit the U.S. industry and lead to increased exports of U.S. chicken products.
Source: National Chicken Council
Soy Growers: Japan Trade Deal Positive for Ag
Washington, D.C. (ASA-September 25, 2019) — The American Soybean Association (ASA) supports a strong global marketplace and is pleased the White House has finalized a trade agreement with Japan, a top 10 export market for soybeans.
Davie Stephens, president of ASA and grower from Clinton, Kentucky, spoke on behalf of the association, “Japan has long been a valued and reliable trading partner for soybeans, and we appreciate that the agriculture component of this deal will assure continued market access for our beans and other ag products. As we go through the details of the agreement, we extend a thank you to the Administration for finalizing this deal.”
With a 63% market share, the United States is the largest soybean supplier to Japan, with exports totaling $976 million in 2017. ASA looks forward to working with the Administration on the next steps towards reaching a comprehensive free trade agreement.
Source: American Soybean Association