U.S., Japan Sign First-Stage Agreement

A U.S.-Japan agreement announced Wednesday by President Donald J. Trump will solidify the longstanding partnership between U.S. farmers and their Japanese customers, creating a platform for future growth in a market in which the U.S. Grains Council (USGC) has worked for more than 50 years.

The pact is seen as a first-stage trade agreement on market access and included an executive agreement on digital trade. After more than a year of formal negotiations, the new agreement will eliminate tariffs, enact meaningful tariff reductions or allow specific quantities of imports at a lower duty for covered products, offering tariff treatment for covered products to match the preferences Japan offers countries in the the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

“The details revealed today about the trade agreement between the U.S. and Japan show that this pact would bring commodities the Council represents largely back in line with TPP and put these commodities on equal footing with other current CPTPP countries,” said Council President and CEO Ryan LeGrand in a statement about the announcement.

“This access is welcomed by our members in the U.S. grains production and exports sectors, and we look forward to rapid implementation of the new agreement.”

Overall, Japan is the third largest agricultural market for the United States.

Japan is the second largest buyer of U.S. corn and sorghum and buys a significant amount of both U.S. barley and U.S. corn-based ethyl tert-butyl ether (ETBE), a component in Japanese gasoline used as an oxygenate.

In addition to maintaining its zero duty on imports of corn for feed, an existing 3 percent tariff applied to a specific in-quota tariff line for corn other than feed will be immediately eliminated upon entry into force of the agreement, which is slated for January 2020.

Japan will also eliminate its current barley for feed mark-up, guaranteeing duty-free access. U.S. sorghum tariffs, which are as high as 3 percent, will be eliminated immediately.

Distiller’s dried grains with solubles (DDGS) and corn gluten feed will remain tariff-free.

The Council’s operations in Japan have helped the Japanese feed, livestock and starch industries establish themselves, innovate and grow. As negotiations continue, the Council and its members will continue to encourage efforts to build upon these important relationships and gain additional access to the Japanese market, including for U.S. ethanol that could be used for fuel.

“While this is the first in several rounds of agreements yet to come and we hope to see continued improvement in the ethanol sector, this is a good first step. We encourage the administration to pursue broader access for all of agriculture as we move forward with our partner, Japan,” LeGrand said.

Learn more about the Council’s work in Japan.