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Deal with Japan is crucial to new Pacific trade pact

 

 

By MATTHEW D. ERNST

Missouri Correspondent

 

WASHINGTON, D.C. — The United States and Japan started talking trade in 1853, after Commodore Matthew Perry anchored four U.S. naval steamboats in Tokyo Bay, not budging until he got to talk trade with high-level Japanese officials.

That trade relationship has covered much ground since – from suspicion to caution, outright antagonism during World War II to post-war economic and trade benefits for both countries. Now, ongoing negotiations between the two countries are viewed by some in agriculture as central to opening up more of Asia markets to U.S. food and farm products.

Japan and the United States are negotiating terms that could apply to the Transpacific Partnership (TPP), which would expand trade in the Pacific. But Japan maintains tariffs on some goods – such as meat and cars – that make it costly for other producers to export into Japan.

American Farm Bureau President Bob Stallman said the two countries should iron out trade differences. "U.S. agriculture is ready for a boost in activity in the Asia/Pacific region," he said. "The Transpacific Partnership promises to open up trade among the U.S., Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and Japan."

The proposed agreement would eliminate tariffs and tariff-rate quotas on all agricultural products between TPP partners, according to a USDA interpretation of the discussions. That "would lead to larger agricultural imports by Japan from TPP partners, with the largest gains accruing to U.S. exporters," according to USDA. "This increase in trade to Japan would likely dominate the increase in imports by all TPP countries."

At least months away

 

Japanese and U.S. officials, including President Barack Obama, are in Asia this week to talk trade. The President began his trip in China on Monday, followed by meetings in Malaysia later in the week.

No announcement of an agreement between the U.S. and Japan is expected next week, according to a statement from the White House press secretary.

The United States is pushing the TPP even as China seeks to ink a competing trade deal with some Pacific economies. Granting the White House trade promotion authority, or "fast track," is viewed essential to advancing TPP negotiations. Fast track authority would keep legislators from tacking on amendments to White House requests for trade deal approvals – an "up or down" vote. Senate Majority Leader Harry Reid (D-Nev.) opposes fast track, as do many organized labor interests. That makes progress toward fast track unlikely until after Republicans take control, said Gary Clyde Hufbauer of the Peterson Institute for International Economics. "The lame duck session will probably be too crowded with other issues (such as tax extenders) to find much time for TPA," he speculated. "And if time were available, so long as Senator Reid wields the gavel, TPA would not be a priority."

The United States and Australia, especially, would like to see Japan’s meat tariff structure changed. "Price restrictions and high tariffs have been the standard for too long, and Japan will have to play on the same terms as other participants for the TPP to work," said Stallman. Countries may place import tariffs on products when domestic producers are unable to compete with production costs from other countries. That is the case in Japan, where meat production – especially beef – is at a competitive disadvantage with production here and in Australia.

Another reason for Japan’s staunch support for meat tariffs structure is the clout of the Japanese Agricultural Cooperative, which "caters to all the requirements that a Japanese farm may have," reported this year by the USDA Tokyo office.

In addition to providing all farm inputs and being a market outlet for farm products, including livestock, the cooperative has significant impact on Japanese farm policy, "developing and maintaining strong ties with agricultural policymakers in the government of Japan." The cooperative has opposed changes to the existing tariff structure.

11/12/2014