The agreement has been signed!
Sort of. There’s still details to be worked out.
On Monday, Oct. 7, U.S. Trade Representative (USTR) Robert Lighthizer, and Japanese Ambassador Shinsuke Sugiyama signed what Lighthizer called an “initial tariff agreement” between the U.S. and Japan in the Roosevelt Room. According to President Donald Trump, Lighthizer, and Sugiyama there is still more work to do to finalize the agreements. Once the agreements are in place, however, Japanese tariffs on U.S. beef and other agricultural trade goods will be reduced or, in some few cases, eliminated altogether.
“Under the terms of the agreement, today Japan has committed to dramatically increase market access to American food and agricultural exports,” summarized Trump during the signing, according to a White House transcript of the signing ceremony.
“These two deals represent a tremendous victory for both of our nations. They will create countless jobs, expand investment and commerce, reduce our trade deficit very substantially, promote fairness and reciprocity, and unlock the vast opportunities for growth.”
The two agreements are the United States-Japan Trade Agreement and the United States-Japan Digital Trade Agreement. The former deals with general physical trade items, including agricultural goods, and the latter addresses digital “goods” and services.
As of press time, the text of the agreement had not been available. During the signing, Trump, Lighthizer, and Sugiyama all noted that the agreement was not entirely complete. Sugiyama described the remaining elements to be “legal … and technical sort of things.”
According to a factsheet put out by the Office of the USTR, the agreement will have many beef-specific impacts that will benefit U.S. beef producers. In short, the three main areas are:
• Japanese tariffs on fresh, chilled, and frozen U.S. beef will decline from the current 38.5 percent to 9 percent over 15 years. This represents “access conditions equal to CP-TPP countries” in reference to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the successor to the Trans-Pacific Partnership (TPP).
• Japanese tariffs will be eliminated on “processed beef products, including beef jerky and meat extracts” from the U.S., which are reportedly at 50 percent, in five to 15 years.
• Japan’s beef safeguard—a trade protocol intended to prevent sudden year-to-year growth in beef imports to the country—will no longer apply to U.S. beef. Fresh, chilled, and frozen beef from the U.S. will instead have its own safeguard beginning at 242,000 metric tons that will grow a preset amount each year through year 15 of the agreement. Japan will reportedly cease applying the safeguard if it is not triggered for four consecutive fiscal years after year 14.
“U.S. exports of beef and beef products to Japan currently face a competitive disadvantage,” noted the USTR factsheet on beef.
“Major U.S. competitors in the Japanese market, including Australia, Canada, and New Zealand receive preferential market access treatment under CP-TPP. The U.S.-Japan Trade Agreement is necessary for U.S. exports of beef and beef products to remain competitive.”
The agreement also includes a detail that will supposedly allow more Japanese beef into the U.S.
According to the USTR factsheet, the U.S. will eliminate its 200-metric-ton beef tariff-rate quota (TRQ) for Japan, and instead increase its “other countries or areas” TRQ from its current 64,805 metric tons to 65,005 metric tons.
As of the most recent USDA information, just over half of the existing beef TRQs for 2019 have been filled. Last year, Japan exported 1,386 metric tons of beef and veal to the U.S. So far this year, it has exported 1,051 metric tons, less than what it had exported to the U.S. by the same point last year. By comparison, the U.S. exported 401,653.3 metric tons of beef and veal to Japan, making it the top destination of U.S. beef and veal by volume.
There is still no official word yet on when the agreement will be finalized nor when it might take effect. From comments made in the signing ceremony and the USTR factsheets, the process will take 15 years once it has been put into action. Despite this uncertainty, the move has been praised by industry leaders, several of whom attended the signing.
“As the top market for U.S. beef exports, Japan accounts for one quarter of our exports and roughly $2 billion in annual sales,” said Jennifer Houston, president of the National Cattlemen’s Beef Association, who was present at the signing.
“As a beef producer, I understand the value of exports to my bottom line, and President Trump understands that increased access to foreign markets like Japan is the economic stimulus we need.”
In speaking to WLJ after the signing, Houston called the event a historic one.
American Farm Bureau Federation President Zippy Duvall, who also attended the signing, similarly praised the agreement and voiced his hope for the near future of other trade agreements.
“We hope the momentum from this win carries through to the negotiations with China this week and sets the stage for similar bilateral agreements with other countries involved with the CP-TPP,” Duvall wrote in a tweet after the signing. “We appreciate this administration’s efforts to improve trade opportunities for farmers.” — Kerry Halladay, WLJ editor
