The agreement, in principle, on the trade deal was announced Sunday [August 25] in a joint presentation by US president, Donald Trump, and Japanese prime minister, Shinzo Abe. with hopes for a formal signing in September alongside UN General Assembly meetings.
Negotiations for the potential trade deal were announced in September 2018, with parties citing the importance of having a stable, strong and beneficial trade relationship between both countries.
The agreement addresses three areas including agriculture, industrial tariffs and digital trade, said Robert Lighthizer, US trade representative, in public remarks. The deal is anticipated to be a “major benefit for beef, pork, wheat, dairy products, wine, ethanol and a variety of other products.”
The proposed agreement would open markets to more than $7bn in agricultural products, he said.
It also should provide “substantial reductions” for tariffs and non-tariff barriers, he said.
Sunday was a good day for “American agriculture,” added Sonny Perdue, US secretary of agriculture following the announcement. Reducing current barriers on agricultural products like feed and feed ingredients means the US could increase sales to Japanese markets, he said. It also will allow for improved competition in the market space.
Japan by the numbers
In 2018, Japan was a top three destination for US exports for feed, feed ingredients and pet food products, according to information from AFIA. The US exported to Japan about $986m in such products.
The country is one of the top three export markets for corn and accounted for about 21% of the US export market for corn in the 2016/17 crop marketing year, according to data from the US Grains Council (USGC).
In 2017/18, Japan was the second-largest market for US sorghum, with it importing about 337,000 metric tons of 13.3m bushels, according to the USGC.
Feed sector, industry reactions
The American Feed Industry Association (AFIA) was among the organizations to welcome news on the trade negotiations with Japan as there continue to be some barriers that limit US animal feed producers’ ability to expand market share.
“We are excited to hear of progress in the US and Japan trade negotiations that could potentially enable US animal food manufacturers to further expand into this important market,” Gina Tumbarello, AFIA’s director of international policy and trade, told us. “While we wait to see what the final agreement entails, our hope is that it will address the outstanding market access issues our industry has experienced in the Japanese market, including tariffs on a handful of US animal food exports and nonscientific restrictions on various processed animal proteins.”
Several feed crop producer and grain organizations also welcomed the news of the progress on the trade deal with Japan.
Ryan LeGrand, president and CEO with the US Grains Council (USGC) said he was “encouraged” by the news. Adding that while some details remain to be clarified, reducing barriers to market access is a “critical win-win.”
“Japan is a deeply valued trading partner for US grain farmers, currently the second-largest buyer of US corn and a significant buyer of US sorghum and US barley for food and feed purposes."
American Soybean Association members (ASA) echoed the sentiment as Japan is also a top 10 export market for soybeans.
During the ongoing trade war with China, the ASA has stressed the importance of work on current and new free trade agreements, said Davie Stephens, ASA president. In addition to directly benefiting soybean exports, a trade deal with Japan has the potential to boost pork and beef exports – both are value-added opportunities for soybeans.
The news is encouraging, added Lynn Chrisp, National Corn Growers Association (NCGA) president. Japan is the second-largest buyer of US corn and has been an important trading partner.
"An agreement with Japan is an achievement NCGA has long advocated for and a much-needed breakthrough amid some challenging times,” he said. “There is more work to do. Moving forward, it’s important the administration continues efforts to gain market access for US products."