President Donald Trump and his Japanese counterpart Shinzo Abe met in New York on Wednesday to discuss the ongoing negotiations of the U.S.-Japan Free Trade Agreement. While the deal still faces challenges, the presidents signed the “first stage” of an initial agreement on Wednesday. Agriculture industry leaders are pleased with the deal but hope for more access and assurances in the final 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,” said Agriculture Secretary Sonny Perdue in a statement on Wednesday. “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.”
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).
“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 National Milk Producers Federation in a statement. “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.”
For the past several months Tom Vilsack, president and CEO of U.S. Dairy Export Council, has talked about this free trade agreement as a significant opportunity for continued growth in dairy exports.
“Japan represents a rapidly growing market, and without a trade deal, our competitors are poised to seize valuable market share from U.S. dairy,” he said in a statement on Wednesday. “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.”
While this agreement is a step in the right direction, Michael Dykes, CEO of the International Dairy Foods Association, says it does not achieve the same tariff rate reductions as those negotiated under the Trans-Pacific Partnership that President Trump pulled the U.S. out of when he took office. Still, he says it should deliver adequate benefits to cheese and whey, two of the country’s largest exports to Japan.
While Mulhern and Vilsack praised the progress, negotiators have made with Japan, they agree there is much more work to be done to best position the U.S. to compete in Japanese markets. Read more reaction from the dairy industry, here.
The National Pork Producer Council also praised the agreement.
"We've seen market share declines in Japan, historically our largest value ex-port market, since the start of the year when international competitors gained more favorable access through new trade agreements,” NPPC President David Herring said in a statement. “Once implemented, the agreement signed today puts U.S. pork back on a level playing field with our competitors in Japan."
The National Corn Growers Association praised the initial deal. Japan is now the second-largest purchaser of U.S. corn in the world.
“NCGA has long-advocated for an agreement with Japan and, with many farmers struggling amid challenging times in agriculture, this is very welcome news,” said NCGA president Lynn Chrisp in a statement. “While we await further details, it seems this phase one agreement will deliver for corn farmers and build upon our successful partnership with Japan.”
KEY ELEMENTS OF THE INITIAL DEAL:
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