Many American farmers and ranchers breathed a sigh of relief when the United States and Japan formally signed a US-Japan Trade Agreement in September. Billed as the first phase of a more comprehensive trade deal, the Agreement establishes standards to promote digital trade and provides Japanese exporters with improved market access for certain industrial products. In return, Japan agreed to slash tariffs on a wide range of food and agriculture exports – a key outcome for the US agriculture community.
For US agriculture producers struggling with a weak farm economy and uncertainty in global markets, implementation of the Agreement cannot come soon enough. Japan consistently ranks as one of the top export markets for agriculture and food, soaking up over $14.5 billion worth of goods in 2018. But farm groups have been ringing alarm bells ever since the United States withdrew from the Trans-Pacific Partnership (TPP) that would have provided them access to the Japanese market sooner.
US strikes a “mini-deal” to catch up
Recognizing the dangers for beef and other US agricultural commodities facing a similar future, the Trump Administration moved to strike a partial free trade agreement with Japan that would level the playing field for US products. Stage one of the US-Japan Trade Agreement mostly achieves that goal by lowering the tariff rates Japan applies to over 90 percent of US agricultural goods, seeking to match Japan’s commitments under TPP.
However, US agricultural producers are not completely out of the woods. That is because the TPP – like most modern trade agreements – included more than just tariff reductions. It also covered a broad range of regulations impacting agricultural trade including customs procedures and product safety approvals. The United States and Japan did not address these so-called “technical barriers to trade” in the first phase of their bilateral agreement.
Source: globaltrademag.com
