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Ag groups praise Trump's trade deal with Japan

Ag groups praise Trump's trade deal with Japan

U.S. exports faced tough competition after exclusion from TPP; the new 'agreement in principle' slashes tariffs on U.S. beef and pork

The U.S. agricultural community lauded President Trump’s announcement of a trade deal with Japan.

The agreement in principle will slash Tokyo’s tariffs on American beef, pork and other agricultural products, while delaying the threat of U.S. tariffs on Japanese auto exports. Trump and Japanese Prime Minister Shinzo Abe announced the agreement Sunday on the sidelines of the Group of Seven summit in France.

Related: Trump may make a deal with Japan in August

“U.S. farmers and ranchers currently face a disadvantage in Japan relative to other countries in the Trans-Pacific Partnership, and this agreement will allow our producers to remain competitive as reliable suppliers,” said U.S. Sen. Pat Roberts, R-Kan., chairman of the Senate Committee on Agriculture, Nutrition, and Forestry. “I’m optimistic this deal will benefit both the U.S. and Japan, and it will further strengthen this important relationship. I look forward to learning the details of this agreement, and I will continue to engage with the administration as they finalize the content and language of the deal.”

Japan is the third global market for U.S. agricultural exports with nearly $13 billion in exports in 2018.

Agriculture Secretary Sonny Perdue is optimistic the trade deal will allow U.S. producers to compete on a level playing field in Japan.

“By removing existing barriers for our products, we will be able to sell more to the Japanese markets,” he said.

This is the second agreement with Japan this year that brings positive news for U.S. beef producers. In May, an agreement was made between the U.S. and Japan to eliminate restrictions on U.S. beef exports that dated to 2003 when a BSE-positive cow was discovered in Washington state.

The National Cattlemen’s Beef Association praised Trump for reaching the deal to remove the 38.5% tariff on U.S. beef entering the Japanese market.

“President Trump and his trade team have delivered another great victory for the U.S. beef industry by expanding market access to Japan, our top export market,” said Jennifer Houston, NCBA president. “Last year, Japanese consumers purchased over $2 billion of U.S. beef, accounting for roughly one-quarter of overall U.S. beef exports.”

Pork producers, who are suffering from the trade war with China, celebrated the announcement of a U.S.-Japan trade deal.

"We look forward to rapid implementation of the agreement as international competitors are currently taking U.S. pork market share through more favorable access," said David Herring, a pork producer from Lillington, N.C. and president of the National Pork Producers Council. Japan represented 25% of total U.S. pork exports in 2018.

Dr. Dermot Hayes, an economist at Iowa State University, estimates exports to Japan will grow from $1.6 billion in 2018 to more than $2.2 billion over the next 15 years as a result of the United States pork industry getting favorable market access in Japan.

“Favorable access to Japan is a major win, not only for the U.S. red meat industry but for all of U.S. agriculture and for our nation's rural economy,” said U.S. Meat Export Federation President and CEO Dan Halstrom.

The wheat industry agreed. U.S. wheat farmers in partnership with USDA’s Foreign Agricultural Service have helped build a strong demand among Japan’s flour millers for several classes of U.S. wheat grown in the Pacific Northwest to the Northern and Central Plains.

However, when the Comprehensive and Progressive Trans-Pacific Partnership, or CPTPP, was implemented Dec. 30, 2018, without the United States, the effective tariffs on imported Canadian and Australian wheat started to decline. 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 than to buy the lower cost wheat from the CPTPP member countries.

“We are very happy that this agreement will end the growing competitive cost advantage that Canadian and Australian wheat imports got under the Comprehensive and Progressive Trans-Pacific Partnership agreement,” said U.S. Wheat Associates Chairman and Paulding, Ohio, farmer Doug Goyings.

The new agreement helps protect U.S. exports that represent about 50% of the Japanese wheat market, with average annual sales of about 3 million metric tons that are currently worth about $700 million per year.

The National Corn Growers Association welcomed the deal amid the recent increase in tariffs on Chinese products and the ethanol waivers granted by the Trump administration.

“This is very encouraging news,” said NCGA President Lynn Chrisp. “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 rules of trade and building on this strong relationship.”

The U.S. Grains Council echoed those sentiments.

“While there are details yet to be worked out, lowering market access barriers with one of our most valuable and loyal grain buyers is a critical win-win,” said Council President and CEO Ryan LeGrand.

Walnut producers are watching the deal too.

“Japan is the fourth leading export market for the California walnut industry, accounting for more than 80 million inshell equivalent pounds annually, valued at over $90 million dollars,” according to a statement from the California Walnut Commission. “In the current 18/19 crop season, the Japanese market accounts for nearly 6% of the industry’s total shipments, with over 34.3 million shelled pounds shipped to date. Over the last five years the Japanese market has grown 44% despite a 10% duty.  The potential for duty reduction would greatly afford new opportunities for market growth for California’s 4,800+ walnut growers and over 90 walnut processors.”

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