The new trade deal between the U.S. and Japan went into effect Wednesday. Montana’s Farm Bureau vice president says it will give the state’s farmers and ranchers more certainty and a competitive edge in the new decade.
U.S. officials have estimated the new deal will reduce tariffs for roughly $7 billion worth of American agricultural products going to Japan. Two of Montana’s big commodities, beef and wheat, are expected to benefit from the new agreement.
Japan’s tariffs on beef from the U.S. will decrease from nearly 40 percent to less than 10 percent in 15 years. Montana will also benefit from the new deal’s quota on tariff-free wheat, which will increase to 150,000 metric tons over 6 years, and a 45 percent reduction in wheat import markups.
At the Montana Farm Bureau office in Bozeman, Executive Vice President John Youngberg says the deal should provide some relief to agricultural producers in the state.
“When we pulled out of TPP, you know, we kind of left people wondering what would happen with foreign trade, and this gives us some certainty,” Youngberg says.
The TPP or Trans-Pacific Partnership was an agreement between a dozen countries during the Obama Administration to lower tariffs and other barriers to trade.
President Donald Trump pulled the U.S. out of the TPP in 2017 before it could be ratified, fulfilling a campaign promise and telling farmers and ranchers that he could work on a better trade deal directly with Japan.
During the negotiations, Youngberg says some of the 11 countries that stayed in the multilateral agreement gained a competitive advantage.
“Australia, Canada, New Zealand — under TPP they got much more favorable rates than the United States did so it affected our trade with Japan,” Youngberg says.
Beef exports from the U.S. to Japan dropped 3 percent between 2018 and 2019.
The new deal, which was approved by Japan’s parliament last month, puts Montana’s beef and wheat at equal footing with its competitors.
Other winners in the trade deal include American pork, wine and barley. But there are some areas where the direct deal with Japan falls short of what the TPP would have offered if the U.S. had stayed in it.
American butter and rice still face trade barriers. Vehicles and parts from Japan and aircraft, liquefied propane gas and semiconductor manufacturing equipment from the United States were left out of the deal for later negotiations.
Still, Montana Farm Bureau’s vice president John Youngberg says the trade deal is a step in the right direction as the U.S. moves forward with the United States-Mexico-Canada Agreement (USMCA), an update to the North American Free Trade Agreement (NAFTA).
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