U.S.-Japan Trade Agreement
Issue at a Glance
President Trump on Oct. 7, 2019, signed the U.S.-Japan Trade Agreement. Once enacted, the agreement will lower tariffs and put U.S. farmers and ranchers on a level playing field to compete in Japan with countries that participate in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, formerly known as the Trans-Pacific Partnership.
Further discussions with Japan on trade rule improvements related to science-based sanitary /phytosanitary standards and biotechnology rules, among other issues, are expected to begin in May 2020.
- U.S. farmers and ranchers export nearly $13 billion a year in agricultural products to Japan, making it the fourth-largest export destination for American farm and ranch goods.
- Japan will place the same level of agricultural tariffs on U.S. goods as it places on CPTPP countries and the European Union. By way of example, the 38.5% tariff on U.S. beef will fall to the 26% placed on beef from Australia, Canada and the EU.
- Other foods such as duck, geese, turkey peaches, melons and more will enter duty-free.
- The Japanese Parliament is expected to approve the agreement later this fall. It may take effect as early as Jan. 1, 2020.
- There is no action by the U.S. Congress necessary, as this is not a full trade agreement that involves substantive changes to existing U.S. law.
This Market Intel details how the U.S.-Japan deal may help U.S. farmers and ranchers catch up to the countries already enjoying significant access to the Japanese market via the CPTPP.
China Trade Deal Progress
Issue at a Glance
On Jan. 15, 2020, the U.S. signed a “Phase 1” trade agreement with China. As a result of the agreement, China has agreed to purchase at least $80 billion of U.S. agricultural products over the next two years, with at least $40 billion to be purchased annually. Specific amounts for product purchases have not been released.
The U.S. exported $19.5 billion of agricultural products to China in 2017. As a result of retaliatory tariffs, agricultural exports were reduced to $9.1 billion in 2018. America’s farmers and ranchers are eager to get back to business globally, and restoring our ability to be competitive in China is key to that.
- Reduction or elimination of non-tariff barriers is included for meat, poultry, rice, dairy and other products. The biotechnology approval process is also improved.
- Tariffs, imposed on September 1, 2019, will also be reduced from 15% to 7.5% on $112 billion of imports from China. Tariffs will remain at 25% on $250 billion of imports.
U.S. – EU Negotiations
Issue at a Glance
With the goal of expanding the world’s largest commercial relationship, the United States and the European Union have agreed to begin trade agreement negotiations. Trade between the two countries amounts to $1 trillion worth of goods and services annually and $3.7 trillion in two-way direct investment. The U.S. exported $12.7 billion in agricultural products to the EU in 2018, while the EU exported $23.7 billion in agricultural products to the U.S.
Although the EU has strongly resisted the inclusion of agricultural issues in this negotiation, Trump administration officials included agriculture in the negotiating objectives they submitted to Congress in early 2019.
Farm Bureau’s trade negotiation objectives
- Include all agricultural products and policies in the negotiations
- Eliminate non-tariff trade barriers
- Ensure market access for biotechnology products
- Address issues concerning import-sensitive products
- Oppose the Precautionary Principle
- Oppose the use of geographic indicators