WASHINGTON — U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe signed a trade agreement on Sept. 25 that lowers or eliminates tariffs on many U.S. agricultural products and increases market access for U.S. producers in Japan.
According to the U.S. Department of Agriculture, of $14.1 billion in U.S. food and agricultural products imported by Japan in 2018, $5.2 billion were 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.
Preferential market access will be provided for some products through the creation of Country Specific Quotas (C.S.Q.s), which provide access for a specified quantity of imports from the United States at a preferential tariff rate, generally zero. C.S.Q. access will cover:
• wheat products
• corn starch
• potato starch
The U.S.D.A. said Japanese imports of U.S. wheat and barley, valued at more than $800 million in 2018, will benefit from a reduced “mark-up” on those products.
In the U.S.-Japan Trade Agreement, Japan has committed to provide substantial market access to U.S. food and agricultural products by eliminating tariffs, enacting meaningful tariff reductions, or allowing a specific quantity of imports at a low duty (generally zero). The tariff treatment for the products covered in the agreement will match the tariffs that Japan provides preferentially to countries in the C.P.T.P.P. agreement.
“The past two years have underscored just how important global trade is to agriculture and rural communities,” said Collin C. Peterson, U.S. House Agriculture Committee chair. “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. 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.”
The agreement puts U.S. wheat back on equal footing with wheat from Canada and Australia that have a tariff advantage under a separate trade deal, said Doug Goyings, chairman of U.S. Wheat Associates.
“We applaud the negotiators from both countries who worked very hard to reach an agreement that is so important to wheat farmers and to their flour milling customers in Japan,” Mr. Goyings said.
Japan’s effective tariff on imported U.S. wheat will drop to the same level Japanese flour millers now pay for Canadian and Australian wheat. Absent the new agreement, U.S. wheat imports could become less competitive, forcing Japanese millers to buy more low-cost wheat from C.P.T.P.P. member countries.
“Resolving trade issues like this and building new opportunities for our wheat and other agricultural products is absolutely needed at a time when wheat farmers are dealing with another year of low prices and a depressed farm economy,” said Ben Scholz, president of the National Association of Wheat Growers. “We are very grateful for the efforts that the staff and leaders at U.S.T.R. and U.S.D.A. put in to reach this agreement.”
The National Sorghum Producers (N.S.P.) sees the agreement, which eliminates tariffs on grain sorghum, as the first step in expanding into southeast Asia.
“We applaud negotiators from both countries for their hard work and foresight to build more opportunities for U.S. agriculture producers,” said Dan Atkisson, chairman of the N.S.P. “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.”
The American Soybean Association (A.S.A.) said the trade deal allows continued market access to a top 10 export market for U.S. soybeans.
“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,” said Davie Stephens, president of the A.S.A. “As we go through the details of the agreement, we extend a thank you to the administration for finalizing this deal.”
The American Feed Industry (A.F.I.A.) applauded the agreement but looks to future negotiations with Japan to address feed safety issues.
“Japan is one of the U.S. animal food industry’s most valuable export markets, representing roughly a third of all exports for feed, feed ingredients and pet food products,” said Joel G. Newman, president and chief executive officer of the A.F.I.A. “As the two countries work toward negotiating an agreement beyond this initial limited trade deal on tariff reductions, we hope that they will address outstanding sanitary and phytosanitary and regulatory issues our industry faces.”
The U.S. Grains Council (U.S.G.C.) said the agreement charts a path to future negotiations with Japan on ethanol.
“Japan is one of the largest and most loyal U.S. corn customers, having bought more than $2 billion of U.S. corn in the most recent marketing year,” said Ryan LeGran, president and c.e.o. of the U.S.G.C. “While this is the first in several rounds of agreements yet to come and we hope to see continued improvement in the ethanol sector, this is a good first step. We encourage the administration to pursue broader access for all of agriculture and we move forward with our partner, Japan.”
Zippy Duvall, president of the American Farm Bureau, said a level playing field was good news for U.S. producers.
“The time for trade wars has come and gone,” he said. “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 agreement also reduces in stages Japan’s tariffs on $2.9 billion in products that include fresh beef, frozen beef, fresh pork and frozen pork. The leveled playing field in the meat sector caused the U.S. Meat Export Federation to raise its projections for U.S. beef and pork exports to Japan to $2.3 billion and $1.7 billion, respectively, in 2020.
“With Japan being the largest value destination for U.S. pork and beef exports, there is no market more critical to the profitability and prosperity of the U.S. red meat industry,” said Dan Halstrom, present and c.e.o. of U.S.M.E.F.
The deal “is not only excellent news for U.S. farmers and ranchers, but also for Japanese consumers who will have greater access to U.S. pork and beef products,” he said.
David Herring, president of the National Pork Producers Council, and Howard “A.V.” Roth, president-elect, joined President Donald Trump in New York for the signing of the agreement.
“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,” Mr. Herring said. “Once implemented, the agreement signed today puts U.S. pork back on a level playing field with our competitors in Japan.”