A trade agreement that opens up Japan to cheaper U.S. beef and pork has been approved by the Asian nation, increasing market access by $1 billion over the next five years, according to the U.S. Meat Export Federation.
The deal, which is supposed to reduce and eliminate tariffs on a raft of U.S. products, marks a big win for meat producers, farmers and ranchers that depend on Japan, one of America's largest red-meat export markets by value. It is set to take effect on Jan. 1.
After Japan's parliament approved the limited agreement on Wednesday, Dan Holstrom, meat federation president and chief executive officer, issued a statement, calling it "one of the biggest developments in the history of red meat trade."
Once implemented, more than 90% of the U.S. food and agricultural products exported to Japan will be duty-free or receive preferential tariff access, according to the Office of the U.S. Trade Representative. Those designated for reduced or eliminated tariffs include poultry, wines and cheeses.
Trade talks between the two powerhouse economies have moved in slow motion. A deal was struck to become part of the larger Trans-Pacific Partnership under President Barack Obama's administration, until President Donald Trump withdrew from the partnership.
With the U.S. out, Australia and other countries gained increased market share to Japan through a revised trans-Pacific partnership agreement among the remaining members that was signed last year. As a result, U.S. beef and pork exports to Japan have faced a competitive disadvantage.
Under the newly approved deal, red-meat products will obtain market access conditions equal to trans-Pacific partnership countries, according to the U.S. trade office. Both governments are expected to negotiate a broader trade agreement early next year.
"I commend Japan's quick action to approve these important trade agreements," U.S. Trade Representative Robert Lighthizer said in a statement. "We expect the President to sign the implementing proclamation for the United States next week."
Last year pork and beef exports to Japan totaled $3.7 billion, according to the U.S. Meat Export Federation. By 2025, the organization projects red-meat exports to reach nearly $5 billion -- $2.8 billion for beef and $2 billion for pork -- as the U.S. gains market share with less expensive products.
In exchange, the U.S. has agreed to eliminate or reduce tariffs placed on 42 lines of agricultural imports from Japan, including green tea, perennial plants, and soy sauce. The same goes for certain industrial imports from Japan, including bicycles and musical instruments.
In an email Thursday, Tyson Foods welcomed the deal's "much anticipated potential" it holds for the entire industry. Tyson is looking forward to "the opportunities we believe will result from this positive progress with one of our most important export partners," a spokesman said.
This fiscal year Tyson sold products in 145 countries, including major markets China, Mexico, Canada and Japan. Export sales from the U.S. totaled $4.1 billion, according to annual reports from the Springdale company. That's down from 2018, when export sales totaled $4.2 billion, but higher from 2017, when exports were $3.9 billion.
A second pact that aims to establish smooth digital trade between the world's largest and third-largest economies was also was approved by Japan. It bans both countries from adding tariffs on products distributed electronically, such as software, music, videos and games.
Business on 12/06/2019