U.S. wheat to Japan vulnerable under CPTPP

With the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) set to take effect Dec. 31, U.S. Wheat Associates President Vince Peterson Monday urged the U.S. Trade Representative to seek a fast solution for vulnerable American wheat exports to Japan.

Testifying Dec. 10 at a public hearing, Peterson thanked the Trump Administration for making negotiations with Japan a priority and explained the CPTPP’s threat to U.S. wheat exports.

The CPTPP will cut the effective tariff on Canadian and Australian wheat to Japan, eventually to a reduction of about $70 per metric ton, or 45 percent below the current tariff for U.S. wheat.

Because Japan has no obligation to change the tariff reduction schedule, Peterson said it will likely shut most U.S. wheat out of the Japanese market and undo decades of market development work.

“It’s getting serious,” said Gary Bailey, a third-generation St. John farmer and chairman of the board for the Washington Grain Commission. “If the tariffs go into effect, it’s just a matter of time before we’re priced out of the market.”

In the past five years, Japan has been the largest, most consistent and valuable market for U.S. wheat, returning almost $1 billion per year to U.S. growers and the grain trade.

Japan uses much American soft white and club wheat varieties (grown on the Palouse) in staples such as noodles and sponge cakes.

Might Japan wait to make any major decisions while U.S.-Japan bilateral negotiations are underway?

“I hope that they continue on as is, and hope negotiations go well,” said Bailey.

The Japanese wheat market has largely been developed since 1949, when the former Oregon Wheatgrowers League (which later became U.S. Wheat Associates through mergers) organized a trade delegation to look into expanding wheat exports there. The organization opened an office in Tokyo seven years later.

“We have invested countless hours and millions of hard-earned farmer dollars and federal export market development program funds building this market,” said Peterson. “During that time, the Japanese milling industry has become an indispensable partner for U.S. wheat farmers.”

The CPTPP, signed March 8, drops tariffs on a series of exports, agricultural and otherwise, covering 13 percent of global gross domestic product. Participating nations are Australia, Canada, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Singapore, Peru and Vietnam.

The U.S. Wheat Associates’ mission is to develop, maintain and expand international markets to enhance wheat’s profitability for U.S. wheat producers and its value for their customers. The organization is funded by producer checkoff dollars managed by 17 state wheat commissions and cost-share provided by USDA’s Foreign Agricultural Service.