Q&A: U.S.-Japan Trade Agreement
Q: What does the new trade pact with Japan mean for Iowa?
A: The United States and Japan announced in September a trade agreement that expands access to a lucrative overseas market for U.S. agriculture exports. This trade deal is good news for American agriculture. Our nation’s farmers and ranchers stand to gain from tariff eliminations and reductions on more than $7 billion of U.S. food and agriculture products, including beef, pork, ethanol, poultry and egg products. This pivotal agreement with Japan and its 127 million consumers will boost confidence and profits for Iowa farmers who are struggling with low commodity prices, poor weather and retaliatory tariffs. Japan is a key market for the United States, importing $14.1 billion in U.S. food and agricultural products in 2018. Here’s how the trade agreement breaks down for Iowa commodities: Iowa cattle producers exported $135 million to Japan in 2018, making the island nation the largest market for Iowa beef producers. Estimates show beef sales to Japan may increase by 7 to 10 percent from this agreement. As the nation’s number one pork producing state, Iowa exported nearly $370 million of pork to Japan in 2018, making it the largest export market by value for Iowa pork producers. For Iowa corn growers, Japan is the second largest export market after Mexico. In 2018, Iowa exported $491 million of corn to Japan. And for soybean growers, the trade agreement with Japan provides much-needed certainty. The United States is the largest soybean supplier to Japan and Iowa soybean growers exported $122 million to Japan in 2018. This trade agreement comes at an opportune time as Iowa farmers prepare to haul in the fall harvest, make strategic marketing decisions and pay bills. This bilateral agreement is an important notch in America’s trade belt, especially for the nation’s food producers in the U.S. farm belt. It will help reduce our trade gap with Japan and boost farm receipts and economic activity in rural America. Importantly, President Trump and Prime Minister Abe have agreed that this “early harvest” agreement will be followed by negotiations to address remaining areas of interest to our farmers, and the rest of the American economy.
Q: What else is on the trade horizon yet this year?
A: As chairman of the Senate Finance Committee, trade is one of the legislative priorities I have focused on throughout the first nine months of this congressional session. Representing a farm state makes this a very important platform for me to champion market access and trade agreements that will expand the economic pie for hardworking rural Americans who grow, process, transport and market food commodities; provide grain, livestock and financial services; and manufacture farm machinery and equipment for sale to neighbors and producers around the world. Fostering healthy competition and growing market access are essential for the livelihoods and prosperity for Iowa families whose jobs and paychecks are directly and indirectly connected to foreign sales. As a lifelong Iowa farmer, I know that farmers want a level playing field to compete for every sale, in every market. During my county meetings throughout 2019, Iowans shared concerns about the uncertainty stemming from trade negotiations between the United States and China. Many expressed strong support of the Trump administration’s goal to stop China from cheating and stealing U.S. intellectual property. Reaching an enforceable trade agreement between the world’s two largest economies has been elusive since the Chinese backed out of a tentative agreement in May. That’s why it’s more important than ever for Congress to ratify the United States-Mexico-Canada Agreement (USMCA). It is the first update to NAFTA in a quarter-century. The United States exported more than a half-trillion dollars of goods and services to our northern and southern neighbors just in 2017. That’s more than we sold to our next 11 largest export markets combined. President Trump and the leaders of Mexico and Canada signed the USMCA 10 months ago. Mexico ratified it more than three months ago. The Canadian parliament is poised to follow suit. The U.S. Congress needs to get on the stick. Throughout the year, I’ve worked closely with the Trump administration and leaders in the U.S. House of Representatives to build momentum and get USMCA across the finish line. The American people didn’t elect us to score political points. Congress needs to do its job, ratify the USMCA and score a victory for the American people.