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Japan Mini-Deal A Victory for U.S. Agriculture?


Japan Mini-Deal A Victory for U.S. Agriculture?

Many American farmers and ranchers breathed a sigh of relief when the United States and Japan formally signed a U.S.-Japan Trade Agreement in September. Billed as the first phase of a more comprehensive trade deal, the Agreement establishes standards to promote digital trade and provides Japanese exporters with improved market access for certain industrial products. In return, Japan agreed to slash tariffs on a wide range of food and agriculture exports – a key outcome for the U.S. agriculture community.

For U.S. agriculture producers struggling with a weak farm economy and uncertainty in global markets, implementation of the Agreement cannot come soon enough. Japan consistently ranks as one of the top export markets for agriculture and food, soaking up over $14.5 billion worth of goods in 2018. But farm groups have been ringing alarm bells ever since the United States withdrew from the Trans-Pacific Partnership (TPP) that would have provided them access to the Japanese market sooner.

Japan top market for U.S. beef

U.S. competitors get a head start

Walking away from the TPP meant that U.S. producers were not eligible to enjoy the tariff cuts Japan adopted under that agreement. Instead, the benefits of improved market access flowed to key U.S. competitors, including from Canada, Australia and New Zealand, as those countries remained under the TPP framework. On top of that, the European Union (EU) landed its own trade deal with Japan that provided European farmers and ranchers with favorable export terms. Taken together, these various agreements put the United States at a serious disadvantage. While Japanese tariffs on foreign agricultural products continued to fall, the United States was stuck paying higher tariff rates, raising the overall cost of U.S. exports relative to competitors.

The U.S. Department of Agriculture captured this dynamic in a report it released late last year on beef exports to Japan. Without a trade agreement, U.S. beef exporters were forced to pay the “Most Favored Nation (MFN)” applied tariff rate of 38.5 percent. Not only were the tariffs paid by European beef exporters (“JAEPA” in the chart below) and by members of the TPP (“CPTPP” in the chart) considerably lower, the tariffs are scheduled to continue dropping over the next 15 years. The widening gap would render U.S. products even less attractive with each passing year.

Japan tariff reduction schedule for beef chart

U.S. strikes a “mini-deal” to catch up

Recognizing the dangers for beef and other U.S. agricultural commodities facing a similar future, the Trump Administration moved to strike a partial free trade agreement with Japan that would level the playing field for U.S. products. Stage one of the U.S.-Japan Trade Agreement mostly achieves that goal by lowering the tariff rates Japan applies to over 90 percent of U.S. agricultural goods, seeking to match Japan’s commitments under TPP.

However, U.S. agricultural producers are not completely out of the woods. That is because the TPP – like most modern trade agreements – included more than just tariff reductions. It also covered a broad range of regulations impacting agricultural trade including customs procedures and product safety approvals. The United States and Japan did not address these so-called “technical barriers to trade” in the first phase of their bilateral agreement.

Awaiting “stage two”

Both U.S. President Trump and Japanese Prime Minister Shinzo Abe have committed to working towards a more comprehensive agreement. The Administration’s U.S.-Japan bilateral negotiating objectives outline goals for every sector of the economy. That should give hope to U.S. agriculture groups, especially rice growers and dairy producers who are still seeking improved market access to Japan. U.S. industrial goods manufacturers, many of whom are eyeing the Japanese market, will be just as eager to see a comprehensive deal in the near future.

U.S. agricultural products left out of Japan mini-deal

The obvious risk is that a comprehensive deal never materializes. The annals of history (and recent memories) are filled with examples of derailed international negotiations. A pending U.S. decision on whether to impose tariffs on Japanese automobiles and parts, for example, could easily send the trade winds blowing in another direction. In addition to disappointing U.S. business groups, failure to land a full agreement could run afoul of World Trade Organization (WTO) rules, which plainly state that trade agreements must cover “substantially all trade.”

Nonetheless, after the year farmers have had, the initial U.S.-Japan Trade Agreement is still a deal worth celebrating.



Max Moncaster is an Associate Director at the National Association of State Departments of Agriculture, where he focuses on trade and natural resource issues. He has served in trade policy and advocacy roles for public and private sector organizations since 2014.

This article originally appeared on Republished with permission.


Organic Growers Make Global Push as Sales Soar

Los Angeles, CA – If Taka Yamaguchi has his way, athletes competing in the 2020 Summer Olympics in Tokyo will be eating organic.

Yamaguchi shared his ambitious plan at a recent Organic Trade Association (OTA) sponsored seminar in Japan attended by more than 100 of Japan’s top grocery retailers, food importers and distributors.

Yamaguchi, executive officer of Organic Japan, was part of a roster of agricultural, organic and food industry experts and policy officials taking part in two OTA programs that brought industry and government leaders together in Tokyo and Osaka to learn about U.S. organic products and familiarize themselves with the proposed Trans-Pacific Partnership trade deal they feel could help feed the country’s growing appetite for organic.

According to the U.S. Department of Agriculture (USDOA), U.S. exports to Japan alone are currently estimated at $80 million annually with growth expected to reach at least $250 million within the next decade.

With a grant of more than $700,000 from the USDOA’s Market Access Program, OTA, she said, “is gearing up a far-reaching strategy for next year that will include more organic promotional and education programs in Japan and around the globe.”

Exports “are increasingly important to U.S. producers and handlers. The organic industry is invested in building the relationships and U.S. organic brand awareness required for long-term export growth,” said Laura Batcha, CEO and Executive Director of OTA.

OTA, she said, “will be showcasing the American organic brand in the largest food shows in the world, conducting international seminars on organic regulatory issues, hosting trade missions to connect foreign buyers and domestic suppliers, and helping retailers in the world’s biggest markets sell the value of organic foods.”

The organization plans to follow up its recent success with a repeat in November 2015, when OTA will return to Japan and conduct targeted promotion of organic products to consumers and continue to build relationships, according to Batcha.

In addition to Japan, the organization will attend major “organic-themed” events in Cologne and Nuremburg, Germany; Seoul, Korea; and Anaheim, California.

Demand for organic in the U.S. has grown significantly with organic sales in 2013 hitting a new record of $35.1 billion, while U.S. organic exports in 2013 reached a new high of $537 million, up more than 20 percent from the previous year.

The Washington, D.C.-headquartered Organic Trade Association (OTA) represents more than 6,500 organic businesses across 49 states. Its membership includes growers, shippers, processors, certifiers, farmers’ associations, distributors, importers, exporters, consultants, retailers and others.



US Sugar Groups Oppose Mexico Trade Deal

Los Angeles, CA – Several national industry groups representing candy makers, soda companies, and other food manufacturers are urging Washington to reject pressure to negotiate a trade deal with Mexico to end a months-long dispute over allegations of cheap sweetener imports from south of the border.

In a recent letter to several top US trade officials, several national business groups including the Coalition for Sugar Reform, the American Beverage Association, and the Grocery Manufacturers Association said any move to restrict imports “could incite retaliation from Mexico on other products, undermine free trade across the continent under the North American Free Trade Act, and threaten over $220 billion in US exports to Mexico.”

Such a move by Washington, the letter said, would “jeopardize this robust trading relationship [with Mexico] by providing US sugar producers with even more insulation from market forces.”

The joint letter, addressed to US Agriculture Secretary Thomas Vilsack, Commerce Secretary Penny Pritzker and US Trade Representative Michael Froman, cited “troubling rumors” that pressure is being applied on the government to hammer out a deal that would include trade barriers.

The communication is seen as the latest indication of escalating tensions in the US sugar industry between sugar producers that favor restricting imports or implementing dumping duties and end-users who oppose any change to NAFTA that allows Mexico to import sugar duty-free in the otherwise protected American market.

US sugar producers filed a complaint with the International Trade Commission earlier this year charging Mexico with dumping sugar on the US market. Two months later, Vilsack said he would “encourage a negotiated agreement” that “could set a ceiling on Mexican sugar imports, which are currently unrestricted.”

The letter also said an agreement could threaten the completion of negotiations of the Trans-Pacific Partnership, the ambitious Pacific trade pact.


US Beef Exports Up 6 Percent Overall, Says USDA

Washington, DC – US beef exports through May 2014 are up 6 percent from a year earlier, according to the US Department of Agriculture’s Foreign Agricultural Service (FAS).

Exports have strengthened to Hong Kong and Mexico, offsetting weaker shipments to Canada, Japan, and Taiwan.

Although exports to Japan had been running above year-earlier levels through April, they weakened in May. Imported beef stocks in Japan are well above year-earlier levels and consumption is stable.

Exports to Mexico have risen this year with shipments during May 48 percent higher than the previous May. Second-quarter exports were raised by 10 million pounds due to stronger demand from Hong Kong and Mexico, the FAS said.

The forecast for US beef exports in 2014 is 2.518 billion pounds, almost 3 percent lower than 2013.

Despite stronger shipments during the first 5 months of the year, exports are expected to fall during the remaining months.

Production is forecast to fall nearly 5 percent in 2014 and then 1 percent in 2015 due to reduced cattle inventories and higher heifer retention for herd rebuilding.

Prices, which have risen as a result of lower supply, the agency said, are likely to dampen export demand over the forecast period. The forecast for exports during 2015 is 2.425 billion pounds, 4 percent lower than 2014.


US, Korea Sign ‘Organic’ Product Labeling Deal

Washington, DC – “Organic processed” products certified in the US or Korea can now be labeled as “organic” in either country, according to the US Department of Agriculture’s Foreign Agricultural Service (FAS).

The move, the FAS said, takes effect immediately and will allow American organic farmers, processors, and businesses greater access to Korea’s growing market for organic products.

Without the equivalency arrangement in place, organic farmers and businesses wanting to sell organic processed products in either country would have to obtain separate certifications to meet each country’s organic standards, the agency said.

This typically has meant two sets of fees, inspections, and paperwork, and delays for US farmers and businesses trying to export a variety of products including organic condiments, cereal, baby food, frozen meals, milk, and other processed products.

Similar to previous US equivalency arrangements with Canada, the European Union, and Japan, this arrangement with Korea eliminates significant barriers, especially for small and medium-sized organic businesses.

This arrangement is Korea’s first organic equivalency arrangement with any trading partner and serves as an example of how closely the US is working with Korea to address emerging issues and strengthen the trade relationship.

Prior to the announcement of the new arrangement, US and Korean technical experts reportedly conducted several on-site audits to ensure that their programs’ regulations, quality control measures, certification requirements, and labeling practices were compatible.

According to US industry estimates, exports of organic processed products from the United States are valued at approximately $35 million annually.

Korea’s National Agricultural Products Quality Management Service and the US Department of Agriculture’s (USDA) National Organic Program—which oversee organic products in their respective countries—will oversee implementation of the new arrangement.

Both countries, the FAS said, “will continue to have regular discussions and will review each other’s programs periodically to ensure that the terms of the arrangement are being met.”