WASHINGTON — Eager for good news on the trade front, U.S. agricultural associations applauded the announcement that the United States and Japan have agreed in principle on a new free trade deal that may help level the playing field for U.S. producers and exporters in one of their most important markets. President Donald Trump and Prime Minister Shinzo Abe and their trade teams announced the agreement on Aug. 23 during the G-7 summit in Biarritz, France. The deal was said to include industrial tariffs and digital trade as well as agriculture.
Trade negotiators revealed no details of the agreement in principle. They were directed by President Trump and Prime Minister Abe to hammer out remaining issues so the agreement may be signed when both heads of state are in New York for the convening of the United Nations 74th General Assembly. Both President Trump and Prime Minister Abe are scheduled to address the General Assembly on Sept. 25.
Agricultural associations presumed that the agreement will provide for at least equal treatment for U.S. farm products compared with what Japan accords to its partner nations in the Comprehensive and Progressive Trans-Pacific Partnership (C.P.T.P.P.). The C.P.T.P.P. is the successor to the proposed Trans-Pacific Partnership free trade agreement from which President Trump withdrew on taking office in 2017. The C.P.T.P.P. sans the United States took effect Dec. 30, 2018, and each member country gives preferred access at lower tariffs to other members’ products.
“Japan is a significant market for U.S. agriculture exports, making today a good day for American agriculture,” said Secretary of Agriculture Sonny Perdue. “By removing existing barriers for our products, we will be able to sell more to the Japanese markets. At the same time, we will be able to close gaps to better allow us to compete on a level playing field with our competitors.”
U.S. agricultural exports to Japan in 2018 were valued at $12.9 billion, making that nation the No. 4 export destination for U.S. farm products.
U.S. Trade Representative Robert Lighthizer said Japan was expected to purchase substantial additional amounts of U.S. corn under the agreement. President Trump was quoted as saying Japan would buy “hundreds of millions of dollars of corn” from the United States. Prime Minister Abe was more reserved, stating, “With regard to the potential purchase of American corn, in Japan we are now experiencing insect pests on some agricultural products. And there is a need for us to buy some of the agricultural products.”
Regardless of the immediate impact of the prospective agreement, corn producers welcomed the announcement.
“This is very encouraging news,” said Lynn Crisp, president of the National Corn Growers Association. “Japan is the second-largest purchaser of U.S. corn and has been an important, longstanding trading partner with America’s corn farmers. We hope the next stage of negotiations are successful in enhancing the rules of trade and building on this strong relationship.”
The National Association of Wheat Growers and U.S. Wheat Associates also praised efforts to secure the new trade agreement with Japan.
“We are very happy that this agreement will end the growing competitive cost advantage that Canadian and Australian wheat imports got under the C.P.T.P.P. agreement,” said Doug Goyings, an Ohio wheat farmer and chairman of U.S. Wheat.
“This is a huge win for those of us who grow wheat and all U.S. farmers and ranchers,” said Ben Scholz, a Texas wheat grower and president of NAWG.
When the C.P.T.P.P. was implemented, Japan’s effective tariffs on imported Canadian and Australian wheat began to decline. U.S. Wheat and NAWG said, locked out of the agreement, U.S. wheat imports would have become less and less cost competitive to the point that Japan’s flour millers would have no other choice other than to buy the lower cost wheat from the C.P.T.P.P. member countries. The associations said the new agreement with Japan should help protect U.S. exports that represent about 50% of the Japanese wheat market with average annual sales of about 3 million tonnes worth about $700 million per year.
Pork and beef producers also stand to gain from a U.S.-Japan agreement.
“The U.S. will be better able to compete with the C.P.T.P.P. nations and the European Union for valuable market share,” said Julie Anna Potts, president and chief executive officer of the North American Meat Institute.
Dan Halstrom, president and c.e.o. of the U.S. Meat Export Federation, said, “This announcement is tremendous news for U.S. farmers and ranchers, and for everyone in the red meat supply chain, because it will level the playing field for U.S. pork and beef in the world’s most competitive red meat import market. It is also a very positive development for our customer base in Japan, which U.S.M.E.F. and our industry partners have spent decades building.”