Tentative trade deal with Japan encourages U.S. farmers, ranchers

EVANSVILLE, Ind., Aug. 27 (UPI) — Word that the United States has reached a tentative trade deal with Japan has given U.S. farmers and ranchers a bright spot in an otherwise dismal year.

President Donald Trump announced a tentative trade accord with Japan on Sunday near the end of the G7 summit in France.

Japan is America’s fourth-leading buyer of agricultural products — and ranks even higher for certain commodities. It is the top importer of U.S. beef, for example, and the second leading buyer of corn.

There had been real concern that U.S. farmers would lose the Japanese market entirely this year after that nation entered into trade agreements with several Asian and European nations and not the United States.

“What this trade deal does it takes what is already a good, strong market for us and stabilizes it,” said Chad Hart, a professor of agricultural economics at Iowa State University.

That market was destabilized in March 2018, when Japan entered the Trans-Pacific Partnership, followed shortly by a separate trade deal with the European Union. Under those pacts, Japan is phasing out tariffs — which are taxes paid by importers — on agricultural products from dozens of countries while leaving tariffs on U.S. products in place.

“Right now, there is a 38.5 percent tariff on U.S. beef in Japan,” said Kent Vacus, the director of international trade for the National Cattlemen’s Beef Association. “If we don’t do anything, that tariff will make it so we’re not competitive in the Japanese market. And we don’t want to give up the Japanese market.”

The pork industry is in a similar situation, said Joe Schuele, a spokesman for the U.S. Meat Export Federation. Roughly 25 percent of American pork is annually sold to Japan, but it faces a “complicated system of tariffs that are significant,” Schuele said.

“Before, all our competitors faced the same rate,” Schuele said. “That all changed when the Trans-Pacific Partnership went into effect. Now, we’re at a significant disadvantage. And those tariff gaps are just going to keep getting wider.”

The U.S. dairy industry also faced lost access to a market. The U.S. Dairy Export Council earlier this month estimated that American dairy farmers would lose billions of dollars in exports to Japan without a deal that “at least puts us on a level playing field with competitors,” John Wilson, the senior vice president and chief fluid marketing officer at Dairy Farmers of America said in a statement.

The United States originally planned to be part of the Trans-Pacific Partnership. It was a deal negotiated by the Obama administration. However, Trump withdrew from deal shortly after taking office, saying his administration would negotiate trade deals bilaterally with individual countries.

Trump announced the deal with Japan “in principal.” Though several issues remain to be worked out, the two countries plan to formally sign the agreement during the U.N. General Assembly meeting in New York in September.

Several agricultural groups released statements of praise and support for the deal, with some pointing out that the trade war with China and the failure of Congress to pass the new United States-Mexico-Canada Agreement, were significantly harming farmers across the country.

“This is much-needed good news on the agricultural trade front,” American Farm Bureau Federation President Zippy Duvall said in a statement.

The Trump administration has not released any details of the pact, other than to say it includes industrial, digital and agricultural trade. Trump repeatedly touted the deal’s benefit to U.S. agriculture.

“It’s a really tremendous deal for our farmers and agricultural ranchers,” Trump told reporters after the trade meeting. U.S. Trade Representative Robert Lighthizer said the pact included beef, pork, wheat, dairy, wine and ethanol, among other commodities.

Trump also said Japan would buy a large amount of “excess” U.S. corn.

“We have excess corn in various parts of our country, with our farmers, because China did not do what they said they were going to do,” he said. “And Prime Minister [Shinzo] Abe, on behalf of Japan, they’re going to be buying all of that corn. And that’s a very big transaction. They’re going to be buying it from our farmers.”