President Trump and Japanese Prime Minister Shinzo Abe announce a bilateral trade agreement that will gradually reduce or eliminate tariffs and establish new quotas on $7.2 billion of agricultural products. After the agreement goes into effect Jan. 1, nearly 90% of U.S. food and agricultural exports to Japan will either be duty-free or receive preferential tariff access. The agreement restores much of the market access U.S. agriculture would have received under the Trans-Pacific Partnership that President Trump pulled out of in January 2017.
The United States will remove tariffs on Japanese industrial goods including machine tools and steam turbines.
According to the U.S. Trade Representative, the U.S.-Japan Trade Agreement will:
- “Reduce tariffs on products such as fresh and frozen pork and beef.
- Provide a country-specific quota for wheat and wheat products.
- Reduce the mark-up on imported U.S. wheat and barley.
- Immediately eliminate tariffs for almonds, walnuts, blueberries, cranberries, sweet corn, grain sorghum, broccoli and more.
- Provide staged tariff elimination for products such as cheeses, processed pork, poultry, beef offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products and tomato paste.
- This agreement provides for the limited use of safeguards by Japan for surges in imports of pork, beef, whey, oranges and race horses, which will be phased out over time.”
Not all U.S. commodities benefit under the new agreement. U.S. rice does not gain any new access to Japan and various dairy products do not benefit with any new gains.
Reaching an agreement with Japan was a priority of the livestock and meat industries because of the tariff advantage their competitors have under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
The National Pork Producers Council says, “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.”
The National Cattlemen’s Beef Association says, “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. Removing that tariff allows more Japanese consumers to enjoy more U.S. beef at a more competitive price.”
The U.S. Meat Export Federation says, “With Japan being the largest value destination for U.S. pork and beef exports (combined export value in 2018 was $3.7 billion), there is no market more critical to the profitability and prosperity of the U.S. red meat industry. It is therefore imperative that we achieve a level playing field for U.S. pork and beef in Japan, so that the U.S. industry can further expand its customer base in this increasingly competitive market. Today’s announcement 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.”
The agreement is to go into effect on Jan. 1 and will not need Congressional approval. Additional negotiations are planned concerning a more comprehensive agreement that will address other restrictions on trade, barriers to trade in services and investment, and other trade issues. The negotiations are to begin next spring.
Former secretaries of ag support USMCA
In a letter to the Congressional leadership, the former Secretaries of Agriculture are urging the Congress to pass the U.S.-Mexico-Canada Agreement.
The secretaries say, “We need a strong and reliable trade deal with our top two customers for U.S. agriculture products. USMCA will provide certainty in the North American market for the U.S. farm sector and rural economy. We strongly support ratification of USMCA.”
Those signing the letter were John Block (Reagan), Mike Espy (Clinton), Dan Glickman (Clinton), Ann Veneman (Bush), Mike Johanns (Bush), Ed Schafer (Bush) and Tom Vilsack (Obama).
Senate passes CR to keep government running
The Senate passed the House-passed continuing resolution that keeps the federal government running through Nov. 21.
The CR replenishes USDA’s borrowing authority under the Commodity Credit Corp. which will allow USDA to continue to make Market Facilitation Program payments to farmers. The legislation requires the USDA to provide estimates for its MFP payments, an analysis of the trade damages used to determine the payments, and which foreign-owned companies received payments.
President Trump is expected to sign the bill.