FRANCE – The United States and Japan announced a new trade agreement at the G-7 summit in France that will focus on agriculture, industrial tariffs and digital trade.
U.S. President Donald Trump said the deal would likely be signed at the United Nations General Assembly meeting in September.
Japan Prime Minister Shinzo Abe added that while some work remains to be done on the final language of the deal, “we have successfully reached consensus with regard to the core elements related to agricultural and industrial trade.”
U.S. Trade Representative Robert Lighthizer affirmed that the deal focuses on agriculture, industrial tariffs and digital trade. Japan will buy up US$7 billion of U.S. agricultural products, mostly corn, under the agreement, Reuters reported.
“With regard to the potential purchase of American corn, in Japan we are now experiencing insect pests on some agricultural products. And there is a need for us to buy some of the agricultural products,” Abe said.
Lighthizer said a final agreement would enable U.S. agriculture to compete in Japan with rivals from nations that receive favored treatment under the Japan-EU Economic Partnership Agreement and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
The development comes as a relief to American farmers, who have seen their agricultural exports take a hit as the United States and China engage in a trade war.
However, American beef, pork, wheat and other agricultural sectors have said they were concerned that they were losing market share in Japan because their products faced higher tariffs than rivals in nations with trade pacts with Japan.
Japan is currently the largest market for U.S. wheat and the second-largest market for U.S. corn, purchasing nearly 13 percent of U.S. wheat exports and 22 percent of corn exports in 2018.
The U.S. sold US$12.9 billion in agricultural products to Japan in 2018, making it the fourth-largest agricultural export market, according to the Agriculture Department’s Foreign Agricultural Service.
In May 2019, Japan agreed to end the last restrictions on U.S. beef imports adopted in 2003 after a U.S. cow tested positive for bovine spongiform encephalopathy, also known as mad cow disease.
The new agreement helps protect U.S. exports that represents about 50% of the sophisticated and demanding Japanese wheat market, with average annual sales of about 3 million tonnes that are currently worth about US$$700 million per year.