A pact between Japan and the U.S. has finally gone into effect after being signed back in October 2019. The deal cuts tariffs on U.S. agricultural products and Japanese industrial goods, apart from automotive parts and passenger cars.
The deal is the result of the Trump administration leaving the Trans-Pacific Partnership (TPP) in early 2017 and the U.S. being faced with higher tariffs than members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), TPP’s successor. In the new deal, Japan will gradually reduce tariffs on beef, pork, and other agricultural goods to the same levels granted to members of the CPTPP.
Beefy details
Japanese tariffs on U.S. fresh and frozen beef fell to 26.6 percent when the deal took effect. Before the deal took effect, U.S. beef was faced with a 38.5 percent tariff. Under the new pact, tariffs will gradually be decreased to 9 percent over the next 15 years. Tariffs on processed beef products such a beef jerky, which were as high as 50 percent, will be eliminated in 5-15 years, according to the Office of the United States Trade Representative (USTR).
[inline_image file=”ed8556b59a1754f091f9188aef35ee4c.jpg” caption=”Japanese Ambassador to the United States Shinsuke (left) and U.S. Trade Representative Ambassador Robert Lighthizer (right) signed the U.S.-Japan Trade Agreement and the U.S.-Japan Digital Trade Agreement Monday, Oct. 7, 2019, in the Roosevelt Room of the White House. The agreement went into effect last week.”]
United States Meat Export Federation (USMEF) forecasts 2020 beef exports to Japan to reach $2.3 billion, at a volume of 360,000 metric tons as a result of the decreased tariffs. The organization also projects by 2025, U.S. red meat exports will approach $5 billion—roughly $2.8 billion for U.S. beef.
“With the U.S.-Japan trade agreement now approved by the Japanese Parliament, the U.S. beef and pork industries look forward to expanded opportunities in Japan, which is already the largest value destination for U.S. pork and beef exports (combined export value in 2018 was $3.7 billion),” reported USMEF President and CEO Dan Halstrom back in early December.
“This agreement is one of the biggest developments in the history of red meat trade, as no international market delivers greater benefits to U.S. farmers and ranchers, and to the entire U.S. supply chain, than Japan.”
“This agreement is one of the biggest developments in the history of red meat trade, as no international market delivers greater benefits to U.S. farmers and ranchers, and to the entire U.S. supply chain, than Japan,” Halstrom said.
Japan’s World Trade Organization beef safeguard will no longer apply to U.S. beef, according to USTR. Fresh, chilled and frozen beef will now be subject to an annual U.S.-specific safeguard, which will begin at 242,000 metric tons. The safeguard will grow 4,860 metric tons per year beginning in year 3 through year 9. Growth in year 10 through 14 will be 2,420 metric tons and will return to 4,840 metric tons in year 15.
If the safeguard is triggered, the duty would be equivalent to the safeguard duty paid by a CPTPP member.
Other affected goods
Japanese tariffs on U.S. exported grated cheese, wine, and high-end pork products will eventually be reduced to zero. U.S. tariffs on Japanese air conditioner parts and fuel cells were abolished as soon as the trade deal came into effect.
Despite Japanese insistence, auto parts and car tariffs will not be reduced or eliminated. Japan will most likely pursue stronger negotiations in the automotive industry in second-round trade negotiations.
Japanese Prime Minister Shinzo Abe and U.S. President Donald Trump have agreed to continue negotiations for a more comprehensive trade agreement and will likely begin in April. — WLJ
