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Japan's Upper House Approves U.S. Meat Trade Agreement
Iowa Ag Connection - 12/05/2019

The Upper House of the Japanese Parliament approved the U.S.-Japan trade agreement, which will greatly improve access for U.S. red meat in Japan. Key provisions of the agreement, which was approved by Japan's Lower House on Nov. 19, were released in October by the Office of the U.S. Trade Representative (USTR).

U.S. Meat Export Federation (USMEF) President and CEO Dan Halstrom issued this statement:

"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). 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.

"USMEF thanks President Trump, USTR and USDA for prioritizing and securing this agreement, which is a major breakthrough for U.S. agriculture. We also extend our appreciation to Prime Minister Shinzo Abe and his administration for taking unprecedented steps to expand market access for U.S. red meat. In addition to the benefits provided to the U.S. industry, Japanese consumers will now enjoy more affordable access to a wider range of U.S. products."

The United States and Japan reached the agreement in which Japan will eliminate or lower tariffs for certain U.S. agricultural products. For other agricultural goods, Japan will provide preferential U.S.-specific quotas.

Once this agreement is implemented, over 90 percent of U.S. food and agricultural products imported into Japan will either be duty free or receive preferential tariff access. For example, under the agreement, Japan will:

- Reduce tariffs on products such as fresh and frozen beef and pork.

- Provide a country-specific quota for wheat and wheat products.

- Reduce the mark-up on imported U.S. wheat and barley.

- Immediately eliminate tariffs for almonds, walnuts, blueberries, cranberries, sweet corn, grain sorghum, broccoli, and more.

- Provide staged tariff elimination for products such as cheeses, processed pork, poultry, beef offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products, and tomato paste.

This agreement provides for the limited use of safeguards by Japan for surges in imports of beef, pork, whey, oranges, and racehorses, which will be phased out over time. When the agreement is implemented by Japan, American farmers and ranchers will have the same advantage as CP-TPP countries selling into the Japanese market.

The United States will provide tariff elimination or reduction on 42 tariff lines for agricultural imports from Japan valued at $40 million in 2018, including products such as certain perennial plants and cut flowers, persimmons, green tea, chewing gum, and soy sauce. The United States will also reduce or eliminate tariffs on certain industrial goods from Japan such as certain machine tools, fasteners, steam turbines, bicycles, bicycle parts, and musical instruments.

The trade agreement between the U.S. and Japan is scheduled to take effect on Jan. 1.

Iowa Governor Kim Reynolds said, "When President Trump announced a negotiated trade agreement between the United States and Japan, I knew it meant a significant win for Iowa farmers. Japan is not only a substantial economic power, but a key export market for Iowa beef, pork and corn. This agreement bolsters exports, provides much-needed relief and stability to Iowa's ag sector, and places even greater pressure on China. I appreciate President Trump and Trade Representative Robert Lighthizer's efforts to expand and open markets. Now it's time for Congress to do it's part and officially ratify the USMCA."

Reynolds said the trade agreement will positively impact over 90 percent of U.S. food and agricultural imports into Japan by reducing or eliminating tariffs. Japan is Iowa's third largest export destination and the leading export market for pork and beef products. In 2018, Iowa companies exported $1.5 billion in goods to Japan.

Earlier this year, Reynolds led a 24-member trade mission delegation to Japan. The mission was focused on the food and ag industry, and was aimed at expanding trade and investment opportunities.

USMEF projected the impact on U.S. beef and pork exports to Japan.

With tariff rates mirroring those imposed on major competitors, USMEF's forecast for 2020 is for U.S. beef and pork exports to Japan to reach $2.3 billion and $1.7 billion, respectively. Export volumes are projected to be roughly 360,000 metric tons for beef and 410,000 metric tons for pork. Volume and value projections are based on reduced tariff rates being in place for the full year.

USMEF projects that by 2025, U.S. red meat exports to Japan will approach $5 billion - roughly $2.8 billion for U.S. beef and more than $2 billion for U.S. pork - as consumption of U.S. red meat increases due to greater access for Japanese consumers and the U.S. gaining market share. The agreement also opens new opportunities for value-added and processed red meat products, with tariffs on these products phasing to zero, which contributes to the overall growth in U.S. exports to the high-value Japanese market.


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