EU-Japan Trade Deal Could Edge U.S. Farmers Out of Market Share

Podcast / Newsline July 11, 2017

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The recent trade agreement between the European Union and Japan is a threat to American agricultural exports to Japan. Chad Smith has more.

Smith: The trade agreement between the European Union and Japan, coming on the heels of the United States’ withdrawal from the Trans-Pacific Partnership agreement, is a bad omen for agriculture. American Farm Bureau economist Veronica Nigh says this should show the U.S. that other countries are willing and able to strike trade agreements without American involvement.

Nigh: We tried to drive that point home when we were talking about the Trans-Pacific Partnership, that it wasn’t a matter of the United States participating or not, rather, other countries basically having a party without us. And this trade agreement between the E.U. and Japan represents 30 percent of global GDP.

Smith: Nigh says it’s a big deal that America is looking at this agreement from the outside. Nigh says the European Union received similar terms Japan would have given to the U.S. if we had ratified the TPP.

Nigh: You see beef tariffs coming down significantly for the E.U. You see additional access for dairy products and significantly reduced tariffs for pork. Beef and pork were two of the products where we thought we would see the greatest market access gains into Japan.

Smith: Some American exports like corn and soybeans won’t experience a significant impact from this agreement because the E.U. doesn’t produce a lot of either. Other American agriculture exports to Japan are going to be hit much harder.

Nigh: Beef and pork, processed foods, wine and cheese. This agreement could lead to significant erosion of U.S. market share. Basically, the Japanese consumer is going to look at two pieces of beef; one from the European Union, one from the United States. One will face a nine percent tariff, so it will cost an additional nine percent over the base price, compared to the U.S. beef product that’s 38 percent more expensive than the base price.

Smith: Nigh says if America can’t strike a trade deal with Japan that puts American producers on a level playing field with their competitors, the U.S. will lose share in the valuable Japanese market. Chad Smith, Washington.

Shiloh Perry
Communications Assistant, AFBF

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