United States sign trade deal with Japan on food and agricultural exports

USA – The United States and Japan have officially signed a trade deal on food and agricultural exports as the two countries continue to deepen and modernize their trade relationship.

The deal, which was announced in September and signed on October 7th, is expected spur growth of US food and agricultural exports, increase farm income, generate more rural economic activity, and promote job growth.

The benefits of this agreement will occur through a combination of tariff elimination, tariff reductions, and new country-specific tariff‐rate quotas (CSQs).

Under this initial tariff agreement, Japan will eliminate or reduce tariffs on an additional US$7.2 billion of US food and agricultural products to the US$5.2 billion duty free food and agricultural products imported by Japan in 2018.

Currently Japan, as the third largest economy in the world is America’s third largest agricultural export market and accounted for US$14.1 billion in food and agricultural exports in 2018.

Once the agreement is implemented, over 90 percent of US food and agricultural imports into Japan will either be duty free or receive preferential tariff access. Japan will eliminate or lower tariffs on American beef, pork, poultry, wheat, cheese, wine, ethanol, and more.

Under the agreement, Japan will provide immediate tariff elimination for US food and agricultural products valued at approximately US$1.3 billion, including almonds, blueberries, walnuts, sweet corn, lactose, milk albumin, grain sorghum, food supplements and prunes.

Another US$3 billion of US exports will benefit from staged tariff elimination matching access conditions in the Comprehensive and Progressive Trans-Pacific Partnership (CP-TPP) agreement.  This group includes processed pork, beef offal, frozen poultry, wine, frozen potatoes among others.

Japan will also reduce tariffs in stages, matching the preferential access of CP-TPP countries for products valued at US$2.9 billion of current trade.

For some products, preferential market access will be provided through the creation of CSQs, which provide access for a specified quantity of imports from the United States at a preferential tariff rate, generally zero.

Japan will provide access through CSQs for products such as wheat and wheat products, malt, glucose, fructose, corn and potato starch, and inulin. 

In addition, for all wheat and barley imports, Japan will provide the same reduction to its wheat and barley “mark up” as provided to CP-TPP suppliers. Japan’s imports of U.S. wheat and barley were valued at more than $800 million in 2018.

The country will also eliminate tariffs for nearly all wine products consistent with the CP-TPP agreement, which were worth approximately US$129 million in 2018 as well as eliminate its 10 percent duty on imports of certain US ethanol.

The deal has been welcomed by many US agriculture associations support this new deal as it levels the playing field with other countries that are a part of the CP-TPP agreement.

The new agreement with Japan comes ahead of the much awaited close of negotiations between US and China this month.

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