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Japan’s Upper House approved a new trade pact with the U.S. on Wednesday, paving the way for lower tariffs on U.S. beef, almonds, walnuts, sorghum and other agricultural products. It cleared the lower house a couple of weeks earlier.
U.S. Trade Representative Robert Lighthizer said he expects Prime Minister Shinzo Abe to sign the pact into law next week, allowing it to be implemented on Jan. 1.
“Now, U.S. farmers and ranchers will have significantly improved access to Japan’s market, and America’s leadership in the growing digital economy will continue to flourish to the benefit of all our workers,” Lighthizer said.
U.S. ag exporters have been at a disadvantage to foreign competitors since in Japan entered into the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership without the United States.
“This agreement levels the playing field and opens the door for U.S. beef producers to meet consumer demand in Japan,” National Cattlemen’s Beef Association President Jennifer Houston said Wednesday.
President Donald Trump withdrew from the Trans-Pacific Partnership when he first came to office, but this “phase one” agreement, negotiated with Japanese Prime Minister Shinzo Abe earlier this year, provides much of the same market access for U.S. producers — with the exception of several U.S. dairy products and rice.
Starting on Jan. 1, Japan and CPTPP member countries like Australia, Canada, Chile and New Zealand will be entering the second year of tariff cuts. That is the level the U.S. will enter at for most commodities.
“The agreement solidifies trade with our second largest corn market, immediately reduces U.S. corn and sorghum imports for all purposes to a zero-tariff level, reduces the U.S. barley mark-up and includes a staged tariff reduction for U.S. ethanol and U.S. corn, barley and sorghum flour,” said Ryan LeGrand, president and chief executive officer of the U.S. Grains Council. “In addition, U.S. feed and food corn, corn gluten feed, and DDGS will continue to receive duty-free market access.”
According to the U.S. Trade Representative’s office, once this agreement is implemented early next year, over 90% of U.S. food and agricultural products imported into Japan will either be duty free or receive preferential tariff access. For example, under the agreement, Japan will:
- Reduce tariffs on products such as fresh and frozen beef and pork.
- Provide a country-specific quota for wheat and wheat products.
- Reduce the markup 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.
The United States will provide tariff elimination or reduction on 42 tariff lines for agricultural imports from Japan valued at $40 million in 2018, including products such as certain perennial plants and cut flowers, persimmons, green tea, chewing gum, and soy sauce. This agreement also provides for the limited use of safeguards by Japan for surges in imports of beef, pork, whey, oranges, and race horses, which will be phased out over time.
U.S. total exports of agricultural products to Japan totaled $13 billion in 2018, our 3rd largest agricultural export market. Leading domestic export categories include: corn ($2.8 billion), beef & beef products ($2.1 billion), pork & pork products ($1.6 billion), soybeans ($927 million), and wheat ($717 million), according to USTR.
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