US and Japan agree trade deal but what are the terms?

US farmers and ranchers can sleep a little better tonight. The US-Japan Trade Agreement was signed on Wednesday (27 September) by US President Donald Trump and Japanese Prime Minister Shinzo Abe in New York.
calendar icon 27 September 2019
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Japan ag exports to the US

The United States will provide tariff elimination or reduction on 42 tariff lines for agricultural imports from Japan valued at $40 million in 2018. Products include:

  • certain perennial plants and cut flowers
  • persimmons
  • green tea
  • chewing gum
  • certain confectionery products
  • soy sauce

The United States has also agreed to modify its global World Trade Organization tariff-rate quota (TRQ) for imports of Japanese beef, enabling Japanese beef producers to compete for a larger share of the TRQ quantity.

The agreement

The US-Japan Trade Agreement will provide America’s farmers, ranchers and agribusiness enhanced market access in their third largest agricultural export market, including 127 million Japanese consumers.

In the US-Japan Trade Agreement, Japan has committed to provide substantial market access to American food and agricultural products by eliminating tariffs, enacting meaningful tariff reductions, or allowing a specific quantity of imports at a low duty (generally zero). Importantly, the tariff treatment for the products covered in this agreement will match the tariffs that Japan provides preferentially to countries in the CP-TPP agreement.

US ag exports to Japan

According to USDA, out of the $14.1 billion in US food and agricultural products imported by Japan in 2018, $5.2 billion were already duty free. Under this first-stage initial tariff agreement, Japan will eliminate or reduce tariffs on an additional $7.2 billion of US food and agricultural products.

Tariff Reduction: For products valued at $2.9 billion, Japan will reduce tariffs in stages. Among the products benefiting from this enhanced access will be:

  • fresh beef
  • frozen beef
  • fresh pork
  • frozen pork

Tariff Elimination: Tariffs will be eliminated immediately on over $1.3 billion of US farm products including, for example:

  • almonds
  • blueberries
  • cranberries
  • walnuts
  • sweet corn
  • grain sorghum
  • food supplements
  • broccoli
  • prunes

Other products valued at $3.0 billion will benefit from staged tariff elimination. This group of products includes, for example:

  • wine
  • cheese and whey
  • ethanol
  • frozen poultry
  • processed pork
  • fresh cherries
  • beef offal
  • frozen potatoes
  • oranges
  • egg products
  • tomato paste

Country Specific Quotas (CSQs): For some products, preferential market access will be provided through the creation of CSQs, which provide access for a specified quantity of imports from the United States at a preferential tariff rate, generally zero. CSQ access will cover:

  • wheat
  • wheat products
  • malt
  • glucose
  • fructose
  • corn starch
  • potato starch
  • inulin

Mark up: exports to Japan of wheat and barley will benefit from a reduction to Japan’s “mark up” on those products. Japan’s imports of US wheat and barley were valued at more than $800 million in 2018.

Safeguards: this agreement 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.

Japan ag exports to the US

The United States will provide tariff elimination or reduction on 42 tariff lines for agricultural imports from Japan valued at $40 million in 2018. Products include:

  • certain perennial plants and cut flowers
  • persimmons
  • green tea
  • chewing gum
  • certain confectionery products
  • soy sauce

The United States has also agreed to modify its global World Trade Organization tariff-rate quota (TRQ) for imports of Japanese beef, enabling Japanese beef producers to compete for a larger share of the TRQ quantity.

Sarah Mikesell

Editor

Sarah Mikesell grew up on a five-generation family farming operation in Ohio, USA, where her family still farms. She feels extraordinarily lucky to get to do what she loves - write about livestock and crop agriculture. You can find her on Twitter or LinkedIn.

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