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Walnut harvest Tim Hearden
Walnuts are harvested near Red Bluff, Calif., in 2018.

U.S.-Japan deal a boon to California specialty crops

The import duty on shelled walnuts will fall from 10% to zero immediately

California farm groups say the U.S.' new trade deal with Japan will be a boon to the Golden State's exports, including walnuts, whose 10 percent import duty in the Asian nation will fall to zero immediately, according to industry officials.

President Donald Trump and Japanese President Shinzo Abe signed the deal today (Sept. 25) to eliminate or reduce tariffs on $7.2 billion of U.S. food and agricultural products.

Among its provisions, the announced deal eliminates the tariffs for almonds, walnuts, broccoli and blueberries and phases them out for such California-produced commodities as cheese, wine, oranges, fresh cherries, egg products and tomato paste.

“The agreement provides fair and equitable access for agriculture and specifically walnuts, greatly benefiting not only our industry but agriculture collectively," said William Carriere, chairman of the California Walnut Commission. "We have long been engaged with United States Trade Representative (USTR) and appreciate the hard work it has taken to get here.”

Japan is the fourth-leading export market for the California walnut industry, accounting for more than 80 million in-shell equivalent pounds annually valued at over $90 million, according to the commission. Walnuts were California's fifth-leading export commodity in 2017, behind almonds, dairy products, pistachios and wine, according to the California Department of Food and Agriculture.

Market has grown

In the past season that ended on Aug. 31, the Japanese market accounted for nearly 6 percent of the walnut industry’s total shipments, with over 35.5 million shelled pounds shipped, the commission reported. Over the last five years the Japanese market has grown 44 percent despite the 10 percent duty, industry officials say.

“This agreement will make California walnuts a better value to our customers and consumers in Japan, building on the markets demonstrated acceptance of California as the walnut of choice," said Michelle Connolly, the CWC's chief executive officer. "Our industry will certainly benefit however the real opportunity is growing consumption in new sectors that have yet to enjoy walnuts tremendous versatility and nutritional benefits."

Like other commodities, the walnut industry has invested heavily in Japan over the last three decades, spending over $58 million with the help of the USDA's Market Access Program to develop trade there, notes Jack Mariani, vice chairman of the CWC's Issues Management Committee.

For its part, Western Growers credits Trump's leadership in negotiating the agreement, which "opens up real market opportunities for producers of fresh fruits, vegetables and tree nuts," CEO Tom Nassif said in a statement. The deal puts U.S. commodities on an equal footing with signatories of the Trans-Pacific Partnership, which Trump pulled the U.S. out of shortly after his inauguration in 2017.

“Japan is the third-largest market for American agricultural products," Nassif said, "and the elimination of tariffs on produce products such as almonds, blueberries, walnuts, broccoli and prunes – as well as the staged tariff elimination for additional products like cherries and oranges – will result in significant export opportunities for our members and the broader fresh produce industry." 

Non-tariff barriers

Nassif said he is also pleased that the two sides will keep negotiating to resolve non-tariff trade barriers, such as Japan's use of what he calls "non-scientific" sanitary and phytosanitary standards to prohibit some U.S. fruits, vegetables and tree nuts from entering the Japanese market.

"Therefore, to ensure the market gains secured in the U.S.-Japan Trade Agreement are fully realized, we must continue to push for reform of the Japanese importation system," he said.

In addition to California's specialty crops, the agreement removes tariffs on fresh and frozen beef and pork and eases access for wheat and wheat products. The United States will reduce or eliminate 42 separate tariffs 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.

A key sticking point in the more than year-long talks has been Abe’s need for a guarantee that Trump will not impose national security tariffs on imported Japanese autos and auto parts, Bloomberg News reports. Speaking to reporters early today, the U.S. president stopped short of publicly withdrawing his threat to impose the tariffs.

The two leaders signed the “first stage” of an initial trade pact after meeting at the United Nations General Assembly. In a statement emailed to Bloomberg News, U.S. Trade Representative Robert Lighthizer’s office described the agreement as “early achievements.”

The proposed deal won’t lower the barriers protecting Japan’s rice farmers -- something Abe could use to help smooth its course through parliament, where it must be ratified before coming into effect, the wire service reports. Trump last week vowed to collaborate with Congress on talks toward a more comprehensive deal with Japan, the Wall Street Journal reports.

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