President Donald Trump and Japanese Prime Minister Shinzo Abe on Wednesday announced major progress on a new trade agreement between the two countries.
The Japanese Parliament is expected to approve the agreement, which mainly relates to agriculture, later this fall. It may take effect as early as Jan. 1, 2020, according to the American Farm Bureau Federation.
“I was actually in the room with one of the biggest millers in Japan last November and they said, ‘Absolutely no bilaterals,’ but yet here we are with a bilateral agreement,” said Darren Padget, Oregon Wheat Commission board member and vice chairman of U.S. Wheat Associates, the overseas marketing arm for the industry. “So it can be done.”
Since the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement entered into force last December, market factors have kept U.S. wheat competitive, according to U.S. Wheat and the National Association of Wheat Growers.
Without this new agreement, the organizations say, U.S. wheat imports would have become less and less cost competitive to the point that Japan’s flour millers would have had no other choice than to buy more of the lower cost wheat from CPTPP member countries.
The agreement is “in many ways the same” as the original Trans-Pacific Partnership, from which Trump withdrew in January 2017, said Dave Salmonsen, senior director for congressional relations at the Farm Bureau.
No action by Congress is necessary, as this is not a full trade agreement that involves substantive changes to existing U.S. law, according to the Farm Bureau.
“Most of the changes in tariffs are happening on the Japanese side,” Salmonsen said.
The agreement covers agriculture, digital commerce and some industrial tariffs, said Salmonsen.
Wheat and other products will have guaranteed access to Japan through quotas.
A second phase of negotiations will likely include updates on sanitary and phytosanitary rules that were included in TPP and some market access discussions for rice, Salmonsen said.
Padget, who attended Wednesday’s announcement, praised U.S. Trade Representative Robert Lighthizer and Chief Agricultural Negotiator Gregg Doud and their teams for their work on behalf of U.S. farmers.
“It was just a good day,” Padget said.