U.S. Talks Announced With Japan, Second Largest Buyer of U.S. Corn

Leaders of the United States and Japan, one of the largest U.S. grain customers, announced Wednesday the two countries would pursue trade talks.

The announcement followed a meeting of U.S. President Donald J. Trump and Japanese Prime Minister Shinzo Abe in association with the United Nations General Assembly meeting in New York City.

“Positive movement with Japan related to trade and our countries’ relationship as a whole is critical to the U.S. grains sector,” said Tom Sleight, U.S. Grains Council (USGC) president and chief executive officer. “Japan is one of the largest and most loyal buyers of U.S. grains, and our relationships with our Japanese customers run deep. We are pleased to see this development in the work between our two countries.”

U.S. Trade Representative (USTR) Robert Lighthizer indicated the Trump administration would notify the U.S. Congress of the talks,the first step toward eventual passage of a trade agreement under Trade Promotion Authority (TPA) and a sign of the seriousness of the effort.

In a statement, the two countries “affirmed the importance of a strong, stable and mutually beneficial trade and economic relationship between the United States and Japan.”

The talks are expected to come in two tranches, the first on goods and “other key areas including services, that can produce early achievements” and a second on other issues.

The impact on agriculture is to be determined in the talks. In the announcement, the United States agreed “outcomes related to market access as reflected in Japan’s previous economic partnership agreements constitute the maximum level.”

Japan was the second largest buyer of U.S. corn in the 2016/2017 marketing year, after Mexico, with sales of more than 12.7 million metric tons (501 million bushels). Based on data from September 2017 to July 2018, Japan will also be the second largest buyer of U.S. corn this year.

The country is also a strong purchaser of sorghum, barley and distiller’s dried grains with solubes, and the Japanese government recently modified its national biofuels policy in a way that could open the door for sales of U.S. ethanol-based additives or ethanol for fuel use. The Council, which partners with local industries and governments to develop markets for grains products, has worked in Japan since 1961.

Additionally, Japan and the United States said this week they would work together with the European Union on issues of global importance, including at the World Trade Organization (WTO).

The United States and the European Union have also been preparing for talks; Lighthizer met his counterparts in New York this week as well, following efforts started earlier in the year between Trump and European Commission President Jean-Claude Juncker. Future discussions are planned throughout the fall, and Lighthizer has indicated USTR could also notify Congress of the U.S.-EU effort.