U.S.-Japan wheat trade announced in principle

President Donald Trump and Japanese Prime Minister Shinzo Abe announced Aug. 25 a trade agreement in principle between the two countries to keep exports of U.S. wheat going to a major buyer.

Negotiations have been on to counter the effect of the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which 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.

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 industry.

The new agreement effects U.S. exports that represent about 50 percent of the Japanese wheat market, with average annual sales of about 3 million metric tons that are currently worth about $700 million per year.

“We are very happy that this agreement will end the growing competitive cost advantage that Canadian and Australian wheat imports got under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement,” said U.S. Wheat Associates (USW) Chairman Doug Goyings. “We want to say thank you to the negotiators at the U.S. Trade Representative office and at the USDA trade and foreign affairs office for working so hard to prevent more export losses for farmers.”

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

“We applaud the Administration for completing this much needed trade deal with Japan,” stated National Association of Wheat Growers (NAWG) President and Lavon, Tex., farmer Ben Scholz. “This is a huge win for those of us who grow wheat and all U.S. farmers and ranchers.”

U.S. Trade Representative Robert Lighthizer noted that Japan imports about $14 billion worth of U.S. agricultural products and said the agreement would open up markets to over $7 billion of such products. He said beef, pork, wheat, dairy products, wine, and ethanol would all benefit by the deal.

Prime Minister Abe said more work remained on the agreement, but made comments that he was optimistic it would be finished before the United Nations General Assembly Sept. 17.

“Chief Agricultural Negotiator Gregg Doud and USDA Under Secretary Ted McKinney deserve special recognition for their efforts,” said USW President Vince Peterson. “They immediately understood what was at stake for wheat farmers without a trade deal and made this outcome a priority. We also thank government officials and our flour miller customers in Japan for their forward-thinking approach to the situation.”

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.