Removing tariffs: US meat and wheat sectors welcome Japan trade deal

27 Sep 2019 --- The US and Japan have reached an agreement on a trade deal, through which Japan will eliminate or lower tariffs for certain US agricultural products. For other traded crops, Japan will provide preferential US-specific quotas. The Office of the US Trade Representative has stated that once the agreement is implemented, over 90 percent of US food and agricultural products imported into Japan will either be duty-free or will receive preferential tariff access.

Key players in the US farming industry have spoken out in favor of the new trade agreement, with the US pork sector voicing its support of the agreement. “Japan is US pork’s largest export market by value. However, US pork has recently seen an erosion of Japanese market share. This is a result of new trade agreements formed by Japan with the EU and the signatory nations to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership [CPTPP] trade agreement, which does not include the US,” a spokesperson of NPPC tells FoodIngredientsFirst.

Reports estimate US pork exports to Japan could grow to US$2.2 billion over the next 15 years.“We’ve seen market share declines in Japan, which is historically our largest value export market, since the start of the year when international competitors gained more favorable access through new trade agreements,” adds David Herring, President of the National Pork Producers Council (NPPC). “Once implemented, the agreement puts US pork back on a level playing field with our competitors in Japan.”

Dr. Dermot Hayes, an economist at Iowa State University, estimates US pork exports to Japan could grow from US$1.6 billion in 2018 to more than US$2.2 billion over the next 15 years under market access terms included in the agreement.

Similarly, the National Association of Wheat Growers (USW) called the development a “most welcome deal that will keep exports of wheat flowing to a very large and crucial market for US farmers.”

“This agreement puts US wheat back on equal footing with wheat from Canada and Australia that currently has a tariff advantage under a separate trade deal,” says USW Chairman Doug Goyings, who is a farmer in Paulding, Ohio.In 2018, Japanese consumers purchased US$2.07 billion of US beef.

In the US beef sector, National Cattlemen’s Beef Association (NCBA) President Jennifer Houston, remarks, “Japan is the number one export market for US beef, accounting for one quarter of our exports. The only way for US beef producers to remain competitive in our leading export market is to remove trade barriers through a bilateral trade agreement with Japan.”

In 2018, Japanese consumers purchased US$2.07 billion of US beef. Currently, US beef faces a massive 38.5 percent tariff in Japan, while exporters from Australia, Canada, Mexico and New Zealand face a 26.6 percent tariff. Leveling the playing field in Japan is outlined as a top priority for the National Cattlemen’s Beef Association.

Liberalizing market access between the US and Japan
Under the new US-Japan trade deal, the following provisions will be implemented:

• A reduction of tariffs on products such as fresh and frozen beef and pork.
• The implementation of a country-specific quota for wheat and wheat products.
• A reduction the mark-up on imported US wheat and barley.
• The immediate elimination of tariffs for almonds, walnuts, blueberries, cranberries, sweet corn, grain sorghum, broccoli, and more.
• A 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.
• The limited use of safeguards by Japan for surges in imports of beef, pork, whey and oranges, which will be phased out over time.
• Once the agreement is implemented by Japan, US farmers and ranchers will have the same advantage as countries under the CP-TPP multi-country trade agreement that are selling to the Japanese market.
• The US will provide tariff elimination or reduction on 42 tariff lines for agricultural imports from Japan valued at US$40 million in 2018, including products such as persimmons, green tea, chewing gum and soy sauce.

By Benjamin Ferrer