By Foster Klug, Associated Press, and No-Till Farmer editors
UNITED NATIONS (AP) — U.S. President Donald Trump on Wednesday announced the “first stage of a phenomenal new trade agreement “with Japan that will expand market access and eliminate tariffs for agriculture and industrial goods and digital trade.
He indicated officials were still negotiating toward a bigger deal.
Trump and Japanese Prime Minister Shinzo Abe signed the agreement on the sidelines of the U.N. General Assembly after months of sometimes contentious negotiations. Trump described the deal with Japan, the world’s third largest economy, as “outlining the significant steps we’re taking toward a fair and reciprocal trade agreement.”
“This is a big chunk, but in the fairly near future we’re going to be having a lot more comprehensive deals signed with Japan,” Trump said.
Farm Groups React
The National Corn Growers Assn. (NCGA) said Wednesday it welcomes news of the deal because it will increase market access for American agriculture products in Japan.
“Japan has been a strong trading partner and friend for American agriculture, now the second-largest purchaser of U.S. corn,” says NCGA President Lynn Chrisp. “NCGA has long-advocated for an agreement with Japan and, with many farmers struggling amid challenging times in agriculture, this is very welcome news. While we await further details, it seems this phase one agreement will deliver for corn farmers and build upon our successful partnership with Japan.”
National Sorghum Producers Chairman Dan Atkisson, a sorghum farmer from Stockton, Kan., says the trade announcement "comes at a pivotal time" and is welcomed news by the U.S. sorghum industry.
"Japan has become a stable market for our farmers with growing interest from the consumer and feeding industries, and we look forward to increased market access, duty free, achieved through this agreement. We also feel this relationship with Japan marks an important step forward in further expanding trade relationships with southeast Asia where there are valuable market growth opportunities," Atkisson says.
Japan imported close to 237,000 metric tons of U.S. sorghum this marketing year. The majority of grain is utilized as animal feed, primarily for poultry. The U.S. is also the dominant supplier of sorghum seed to Japan, exporting 81 metric tons of treated seed in 2017.
The American Soybean Association (ASA) is also pleased the White House has finalized a trade agreement with Japan, a top 10 export market for soybeans.
Davie Stephens, president of ASA and grower from Clinton, Ky., said Japan has long been a valued and reliable trading partner for soybeans, "and we appreciate that the agriculture component of this deal will assure continued market access for our beans and other ag products. As we go through the details of the agreement, we extend a thank you to the Administration for finalizing this deal.”
With a 63% market share, the U.S. is the largest soybean supplier to Japan, with exports totaling $976 million in 2017. ASA looks forward to working with the Administration on the next steps towards reaching a comprehensive free trade agreement.
A major roadblock to a final deal has reportedly been considerable behind-the-scenes wrangling over Japanese worry that Trump would slap new tariffs on Japanese autos, which make up a significant amount of Japanese exports to the United States, in the future, despite a trade deal.
Farm groups have also warned the administration that agricultural producers could soon expect to lose market share in Japan if the United States wasn’t treated on par with top competitors from Canada, Mexico, Australia and the European Union.
Trump said Japan will open new markets to approximately $7 billion in U.S. agriculture products, and tariffs would “now be significantly lower or eliminated entirely” on American beef, pork, wheat, cheese, corn, wine and more.
“This is a huge victory for America’s farmers, ranchers and growers, and that’s very important to me,” Trump said.
It also covers commitments on $40 billion in digital trade between the countries, Trump said, “which will greatly expand commerce across cutting edge products and services.”
Abe said the agreement “is actually a win-win solution for Japan and the United States.”
“We have successfully covered a wide range of areas, including not only the industrial goods, but also the agricultural products and also the digital trade between the two sides,” Abe said.
The two sides reached a basic agreement in late August on trade in farm and digital products and other industries. But tariffs on autos and parts have long been a sticking point.
Toshimitsu Motegi, who became foreign minister recently after negotiating the deal as economy minister, and other Japanese officials have reportedly expressed wariness about Washington from forcing any last-minute changes.
A long-sought trade agreement with Japan was delayed when Trump withdrew the United States from a pan-Pacific trade agreement shortly after taking office in 2017.
Japan and the other 10 remaining members of that trade pact, the Trans-Pacific Partnership, then renegotiated their own deal without the United States. Trump said he preferred that Washington and Tokyo strike a bilateral deal, which resurrected the longtime issue of tariffs on Japanese car and auto parts exports to the United States and of stiffer duties on U.S. exports of farm and other products to Japan.
The trade talks between Tokyo and Washington are aimed, in part, from the U.S. perspective, to redress a chronic trade imbalance in Japan’s favor, which totaled $67.6 billion in 2018 according to U.S. figures.
The United States is Japan’s biggest single overseas market.
“We are Japan’s top foreign investor, by far, and Japanese investments in America support hundreds of thousands of American jobs,” Trump said. “The deal we’re announcing today will reduce our chronic trade deficit, built up and taken effect over many, many years of dealing with other governments and other administrations, and it will deepen our enduring national ties.”