U.S. Ag is a Big Winner in Japan Trade Deal – DTN

Sorghum field. Photo: K-State Research and Extension - Creative Commons

Japan will lower or eliminate tariffs on roughly half of all U.S. agricultural and food exports to Japan, according to a deal signed Wednesday by President Donald Trump. This deal provides the U.S. with parity to what other countries received in the Trans Pacific Partnership.

The Trump administration said the agreement would lower or eliminate tariffs into Japan’s markets for about $7 billion in agricultural products.

“Japanese tariffs will now be significantly lower or eliminated completely on beef, pork, wheat, cheese, corn, wine and so much more,” President Trump said at a signing ceremony in New York with Japanese Prime Minister Shinzo Abe.

The trade agreement would mean “Really big dollars for our farmers and for our ranchers,” Trump said.

The U.S. Grains Council stated the trade deal would “solidify our longstanding partnership for the future and create a platform for growth into new sales and new sectors, including the potential for sales of U.S. ethanol.”

Currently, the U.S. exports about $14 billion in agricultural and food products to Japan, of which about $5.2 billion are already duty free, according to the U.S. Trade Representative’s Office. Under the deal, Japan will reduce or eliminate tariffs on another $7.2 billion in agricultural or food products.

Level Playing Field

Once the agreement is implemented by Japan, U.S. farmers and ranchers will have a level playing field selling into Japan, such as other countries that joined the Trans Pacific Partnership have. The National Pork Producers Council cited Iowa State University economist Dermot Hayes projecting that pork sales would increase from about $1.6 billion annually to $2.2 billion over the next 15 years due to lower duties.

Under the agreement, more than 90% of U.S. agricultural products and food exported to Japan will be either duty free or have lower tariff barriers. A fact sheet from the White House stated the deal would immediately eliminate tariffs for almonds, blueberries, broccoli, cranberries, grain sorghum, sweet corn, walnuts and other products.

Fresh and frozen beef and pork will see lower tariffs as well. Japan will have some “safeguards” in place to avoid surges of imports of beef, pork and certain other products. Reuters noted Japan would provide lower tariffs on about 240,000 metric tons of beef, or about 90% of what the U.S. exports to Japan. U.S. beef producers were seeking to lower the tariff from 38.5% down to 9% to match what competitors such as Canada and Australia pay exporting to Japan.

Wheat and wheat products will receive a specific quota for lower tariff rates.

Some products will see tariffs reduced or eliminated in stages, such as cheeses, processed pork, beef offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products and tomato paste.

In return, Japan will also see lower tariffs or elimination of tariffs for more than 40 agricultural products, including perennial plants and flowers, teas and soy sauces. The U.S. will also lower or reduce tariffs on industrial products such as certain machines, steam turbines, bicycles and parts, and musical instruments.

The U.S. and Japan also have reached a separate agreement on some issues with digital trade such as music, videos, e-books, software and games. The plan is expected to open up “barrier-free cross-border data transfers in all sectors” of the economy. The White House noted, “The digital trade agreement with Japan meets the gold standard on digital trade rules set by the USMCA and will expand trade in an area where the United States is a leader.”

The U.S. Chamber of Commerce called the announcement a “partial U.S.-Japan trade deal” that would help farmers and ranchers, as well as the digital economy. But Myron Brilliant, executive vice president and head of international affairs for the Chamber, said the trade deal doesn’t go far enough. The Chamber called for a more comprehensive agreement dealing with issues such as intellectual property protection and regulatory barriers.

“A comprehensive trade deal with Japan would provide some much needed predictability — not only for the U.S. and Japan but for all our trade allies. Now is the moment for our countries to work together to restore stability to the rules-based global trading system,” Brilliant said.

Chris Clayton can be reached at chris.clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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