YAKIMA, Wash. — The Trans-Pacific Partnership trade deal likely will benefit Pacific Northwest tree fruit in time but may not much in the short-term.
The deal, reached but yet to be ratified by the U.S. and 11 other countries, will make it easier for the Northwest to export apples, pears and cherries to Vietnam and Malaysia. It may boost cherries to Japan, but is not likely to open apple and pear doors there that have been closed for years.
The agreement does not include China which has a 10 percent tariff on U.S. apples, pears and cherries, plus a 13 percent value added tax on all three.
“Technically, we have access with apples to Japan, but the requirements are so onerous that no one has shipped there since 2000,” said Mark Powers, executive vice president of the Northwest Horticultural Council in Yakima. The council represents tree fruit growers and shippers in Washington, Oregon and Idaho on national and international policy issues.
The agreement cuts Japan’s 8.5 percent tariff on U.S. fresh cherry imports in half initially and eliminates it in six years, according to the USDA. Northwest cherries are prominently featured in a White House video promoting the agreement.
Japan’s 17 percent tariff on fresh apples is reduced by 25 percent and then eliminated in 11 years. It’s 4.8-percent tariff on fresh pears goes away on implementation of the agreement.
While those are positives, phytosanitary issues, not tariffs, are keeping U.S. apples and pears out of Japan, Powers said. Those issues are being worked on and the agreement includes rule changes on how they are considered which may be helpful, he said.
The agreement goes beyond prior agreements by including environmental and labor rules, he said.
Fifteen years ago, Japan imported around 800,000, 20-pound boxes of Northwest cherries annually. In the last five years, it’s been around 300,000 and is the sixth largest export market. The challenge there isn’t so much the tariff as it is Japan doubling the size of its own cherry production in the past 10 years, said B.J. Thurlby, president of Northwest Cherry Growers in Yakima.
Meanwhile, South Korea exploded from zero to a 1.2-million-box market in the past 10 years, largely helped by elimination of a 24-percent tariff in 2012, Thurlby said.
China also is a 1.2-million-box market, even with its tariff and tax.
“My question is when will this (tariff reduction) happen with China?” Thurlby asked.
In the near term, the TPP should help Northwest cherry exports to Southeast Asia, he said.
The agreement eliminates a 10 percent tariff on apples, pears and cherries in Vietnam in three years and immediately gets rid of a 5 percent tariff on apples, pears and cherries in Malaysia, according to USDA.
Vietnam is roughly a $27 million annual market for Northwest apples, pears and cherries with most of that being apples, Powers said. Malaysia is about $12 million per year. Removal of the tariffs will make the Northwest more competitive in those areas with China and New Zealand, he said.
Removal of the tariffs will probably have little impact this season because Washington has fewer apples and foreign countries have less buying power against a stronger dollar, said Todd Fryhover, president of the Washington Apple Commission in Wenatchee. However, the tariff reductions should help in future seasons, he said.
Vietnam has grown as a market, buying 1.6 million boxes of Washington apples in the 2014 crop year, but some of that was going into China when China was closed to U.S. apples.
Washington exported 429,301 boxes of apples to Malaysia from the 2014 crop.