Iowa Secretary of Agriculture Mike Naig was in New York City on Sept. 25 as President Donald Trump signed a trade deal with Japan’s Prime Minister Shinzo Abe. Along with other ag leaders, Naig participated in a signing ceremony recognizing the new bilateral trade agreement.

“Japan is one of Iowa’s most important trading partners,” Naig said. “This agreement is a win for agriculture and welcome news as our farmers gear up for harvest. By lowering tariffs on ag products, Iowa producers can be more competitive in the Japanese market. This deal helps build the momentum we need to get Congress to ratify USMCA [U.S.-Mexico-Canada Agreement] and reach a long-term trade agreement with China.”

Naig says he remains focused on expanding markets and trade for Iowa agriculture. He will be joining Iowa Gov. Kim Reynolds on a trade mission to Japan in November. Details on the trade mission can be found at the Iowa Economic Development website.

Seen as win-win for Japan, U.S.

The agreement with Japan gives the U.S. enhanced market access to its third-largest trading partner. The deal reduces or eliminates tariffs on $7.2 billion in ag products, almost half of the $14 billion imported by Japan annually. Over $5 billion worth of imports were already duty-free.

Tariffs on beef and pork will be reduced in stages, but the exact timeline has yet to be announced. Other ag products will see tariffs reduced immediately. Wheat from the U.S. will still face a quota limit on the amount that can be exported to Japan. The deal also reduces import taxes on software and digital media traded between the two countries.

Dermot Hayes, an Iowa State University economist, estimates U.S. pork exports to Japan could grow from $1.6 billion in 2018 to more than $2.2 billion over the next 15 years under market access terms included in the agreement. U.S. pork is highly dependent on exports, shipping more than 25% of total production to foreign markets.

Feedback from Iowa ag groups

The Iowa Cattlemen's Association is pleased to hear about progress on the trade deal with Japan. “President Trump and Prime Minister Abe of Japan made another step towards a bilateral trade agreement that is expected to greatly benefit the U.S. cattle industry,” says Matt Deppe, CEO of ICA. The agreement will include significant tariff reductions for U.S. beef imported into Japan.

"This bilateral trade agreement with Japan is significant for two reasons. First, Japan is our No. 1 export market by value, and the Japanese are hungry for U.S. beef," Deppe says. "Second, a positive advancement on the trade front is good news for all of Iowa agriculture. Hopefully, this momentum will carry forward to the ratification of USMCA and trade talks with China."

International trade adds over $300 to the value of every head of cattle in the state of Iowa, and about one-quarter of that value is due to exports to Japan. Currently, U.S. beef faces a 38.5% tariff, while competitors from other countries like Australia, New Zealand and Canada have a tariff rate of only 26.6%. “The ICA, together with the National Cattlemen’s Beef Association, will continue to lobby for increased export opportunities for U.S. beef,” Deppe says.

Corn growers welcome opportunity

The Iowa Corn Growers Association also welcomes the signing of the U.S.-Japan agreement, as Japan is lowering tariffs on U.S. ag products by $7 billion. ICGA is looking forward to seeing the details of the agreement that will provide continual market access with Japan, says ICGA President Jim Greif, who farms near Monticello in eastern Iowa.

“The Sept. 25 announcement is great news for farmers because Japan has been a loyal customer of corn in all forms,” Greif says. “ICGA supports existing bilateral and multilateral trade agreements with partners around the world. With over 95% of the world’s population living outside the U.S., trade is very important to farmers in Iowa.”

The National Corn Growers Association also welcomed the news of a trade agreement between the U.S. and Japan that will increase market access for American agriculture products in Japan.

NCGA President Lynn Chrisp says, “Japan has been a strong trading partner and friend for American agriculture, now the second-largest purchaser of U.S. corn. NCGA has long advocated for an agreement with Japan, and with many farmers struggling amid challenging times in agriculture, this is very welcome news. While we await further details, it seems this Phase 1 agreement will deliver for corn farmers and build upon our successful partnership with Japan.”

Iowa Farm Bureau President Craig Hill released the following statement:

“The U.S. and Japan announced they reached an agreement on a trade deal that further opens agricultural markets for both countries and is welcome news for Iowa farmers. The agreement levels the playing field so U.S. farmers can compete in Japan facing the same level of ag tariffs on U.S. goods as Japan places on Trans-Pacific-Partnership [TPP] countries and the EU.

“Japan’s global ag imports are growing, and Japan’s consumers are hungry for U.S. meat and ag products. This deal is a major win for Iowa’s pork and cattle producers as Japan represents the largest value importer of U.S beef and pork, and the second-largest value importer of U.S. corn. 

“Maintaining a level playing field with other countries is vital to expanding our ag trade with Japan, and this trade agreement ensures that the U.S. will not be left behind or face a disadvantage. In a time of turbulent agricultural trade and low commodity prices, this agreement is a welcome sign of foreign market stability. We look forward to this deal being finalized by the Japanese Parliament this fall and hope to see the deal go into effect next spring.” 

A look at the export statistics

Last week Naig released the following summary of the latest year’s export numbers. These are the 2018 U.S. ag exports to Japan:

Beef

Pork

Corn

Sources for statistics: U.S. Meat Export Federation, U.S. Grains Council and Iowa Economic Development Authority.