U.S. reaches trade agreement with Japan

WASHINGTON - The U.S. and Japan on Wednesday, Sept. 25, reached a partial trade agreement for certain agriculture and industrial goods, as well as on digital trade. The countries have indicated they will continue working toward a comprehensive agreement.

According to the Office of the U.S. Trade Representative, after the agreement has been ratified by Japan’s legislature, more than 90% of U.S. food and agricultural products imported into Japan will be either duty free or will receive preferential tariff access.

A statement from the U.S. Department of Agriculture explained that of the $14.1 billion in U.S. food and ag products imported by Japan in 2018, $5.2 billion were duty free. Under this agreement, Japan will eliminate or reduce tariffs on an additional $7.2 billion of U.S. food and ag products.

Tariffs will be eliminated almonds, blueberries, cranberries, walnuts, sweet corn, grain sorghum, food supplements, broccoli and prunes. Tariffs will be reduced on fresh and frozen beef and pork. Another $3 billion in products will have staged tariff elimination. That includes wine, cheese and whey, ethanol, frozen poultry, processed pork, fresh cherries, beef offal, frozen potatoes, oranges, egg products and tomato paste. The agreement also will provide a country-specific quota for wheat and wheat products and reduce the mark-up on imported U.S. wheat and barley.

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. The U.S. will provide tariff elimination or reduction on 42 tariff lines for agricultural imports from Japan valued at $40 million in 2018, including products such as certain perennial plants and cut flowers, persimmons, green tea, chewing gum, and soy sauce. The U.S. also will reduce or eliminate tariffs on certain industrial goods from Japan such as certain machine tools, fasteners, steam turbines, bicycles, bicycle parts, and musical instruments.

The U.S. also has agreed to modify its global World Trade Organization tariff-rate quota for imports of Japanese beef, enabling Japanese beef producers to compete for a larger share of the global tariff-rate quota quantity.

The agreement received applause from across agriculture. American Farm Bureau Federation President Zippy Duvall noted in a statement that Japan is U.S. agriculture’s fourth-largest export destination.

“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,” he said. “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.”

Minnesota Farm Bureau Federation President Kevin Paap said in a statement that Japan also is the fourth-largest buyer of Minnesota ag products.

“With the provisions included in this agreement, we expect our agricultural exports to significantly grow in a marketplace of 127 million Japanese consumers,” he said.

“I am also happy that this trade agreement aligns with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in tariff rate reductions over the same timeline,” North Dakota Agriculture Commissioner Doug Goehring said in a statement. “This is very beneficial for American agriculture and our North Dakota farmers and ranchers.”

Beef industry groups noted the importance of Japan, which in 2018 purchased $2.1 billion of U.S., accounting for nearly one-fourth of total U.S. beef export sales. Those sales came even as the U.S. faced a 38.5% tariff in Japan, compared to competitors Canada, Mexico, Australia and New Zealand with only a 26.6% tariff that is scheduled to eventually decline to 9%.

“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,” said National Cattlemen’s Beef Association President Jennifer Houston in a statement.

“This new deal will give our domestic beef industry more leverage and a level playing field with our competitors so we can expand our market share in Japan and, hopefully, return more dollars to the pockets of North Dakota’s hard working cow-calf producers,” said North Dakota Stockmen’s Association President Dan Rorvig.

National Corn Growers Association President Lynn Chrisp noted in a statement that Japan 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. While we await further details, it seems this phase one agreement will deliver for corn farmers and build upon our successful partnership with Japan,” he said.

The agreement also got praise in political circles.

“I’m glad to see some progress made on tariff reductions in this agreement that will help American farmers and ranchers catch up on some of the access we lost when the Administration pulled us out of the Trans-Pacific Partnership,” said House Agriculture Committee Chairman Collin Peterson, D-Minn.. “It’s only a piece of the puzzle though, and additional agreements with Japan will be needed to make all of U.S. agriculture competitive.” 

“This access is exactly what we’ve been working with the administration to secure, and we will continue advancing efforts to get better trade deals,” said Sen. John Hoeven, R-N.D., chairman of the Senate Agriculture Appropriations Committee and a member of the Agriculture Committee.

“This deal not only helps American workers and businesses, but Japan’s agreement to reduce tariffs on top North Dakota products like wheat, ethanol, and beef will also be of significant help to our farmers and ranchers,” said U.S. Senator Kevin Cramer, R-N.D.

“Agreements like this and the pending U.S.-Mexico-Canada Agreement will strengthen trade with North Dakota’s top partners, create jobs and improve our economic health,” said North Dakota Gov. Doug Burgum.

“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,” said U.S. Agriculture Commissioner Sonny Perdue.