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U.S President Donald Trump, right, and Japanese Prime Minister Shinzo Abe shake hands following a news conference at the Group of Seven summit in France over the weekend.
AP
U.S President Donald Trump, right, and Japanese Prime Minister Shinzo Abe shake hands following a news conference at the Group of Seven summit in France over the weekend.

Japan, U.S. agree 'in principle' on trade deal for U.S. corn, wheat, beef


SD Ag Connection - August 27, 2019

WASHINGTON, DC - The U.S. and Japan agreed in principle over the weekend on a trade deal that would slash Tokyo's tariffs on American beef, pork and other agricultural products, while delaying for now the threat of additional levies on Japanese auto exports to the United States. The possibility of such a deal was announced last year and negotiations resulted in U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe announcing at the G7 summit in Biarritz, France, that Japan would cut the beef and pork tariffs as well as buy U.S. wheat and corn.

"If you say 'win-win,' it's a capital letter 'Win' for the U.S. and a small-letter 'win' for Japan," Ichiro Fujisaki, a former Japanese ambassador to the U.S., told Yahoo Finance news. The deal would put the U.S. back in line with its rivals for Japan's agricultural market in terms of tariffs, a position Washington would already enjoy had Trump not rejected an earlier multilateral trade deal.

"In Japan's case, it's a small win plus non-negative assurance that no unilateral measures will be taken by the U.S., like on limiting car importations or some relations with security issues," Fujisaki said. While Japan kept the threat of tariffs at bay, it didn't get a removal of existing auto tariffs in exchange for its farm concessions, nor a public promise not to impose higher car levies.

The countries have reached consensus on "core elements" and were aiming to sign a deal during United Nations meetings next month, Abe said. The prime minister said that agricultural product purchases were a possibility, adding that crop pests had resulted in the need for "emergency support" to enable the private sector to buy American corn.

It was Trump's threat of punitive tariffs on Japanese auto exports that spooked Abe into agreeing last September to start bilateral trade talks with the U.S. In turn, Trump came under pressure from U.S. farmers, reeling from the trade war with China, who have also been hobbled by the tariff disadvantage in the Japanese market compared with competitors from signatories of the Trans-Pacific Partnership regional trade deal he rejected.

U.S. Secretary of Agriculture Sonny Perdue said, "Japan is a significant market for United States agriculture exports, making today a good day for American agriculture. By removing existing barriers for our products, we will be able to sell more to the Japanese markets. At the same time we will able to close gaps to better allow us to compete on a level playing field with our competitors. I thank President Trump and Ambassador Lighthizer for their constant support of America's farmers and ranchers and their hard work negotiating better trade deals around the globe."

U.S. Senator Pat Roberts, chairman of the Senate Committee on Agriculture, Nutrition, and Forestry, said, "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. 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. In May, an agreement was made between the U.S. and Japan to eliminate restrictions on U.S. beef exports. In June, Chairman Roberts held a hearing to gain insight from the Trump Administration on its trade efforts. Roberts urged officials to strengthen current trade agreements and aggressively seek new agreements with countries like Japan.

U.S. Meat Export Federation (USMEF) President and CEO Dan Halstrom said, "This announcement is tremendous news for U.S. farmers and ranchers, and for everyone in the red meat supply chain, because it will level the playing field for U.S. pork and beef in the world's most competitive red meat import market. It is also a very positive development for our customer base in Japan, which USMEF and our industry partners have spent decades building. These customers have been very loyal to U.S. pork and beef, but our exports to Japan could not reach their full potential under Japan's current tariff structure."

"For Nebraska, our trade relationship with Japan is one of our most important," said Nebraska Governor Pete Ricketts. For the past several years, Nebraska has led the U.S. in beef production. Japan is Nebraska's fourth largest export market, with over $1.1 billion worth of exports in 2017. The country is Nebraska's largest direct international investor with Japanese companies employing about 9,400 of Nebraska's 1.92 million people. Japan is Nebraska's number one international customer for beef, pork, eggs and number two for corn, wheat and ag exports overall.



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