A new day may be dawning for America’s farm and business trade opportunities, thanks to a pending trade agreement with the “Land of the Rising Sun.”
President Trump confirmed a preliminary pact last week between the United States and Japan.
For farmers like me, this looks like a welcome development. Our livelihoods depend on customers in foreign countries and we desperately seek a truce in our country’s ongoing trade wars.
“It’s a really tremendous deal for our farmers and agricultural ranchers,” said President Trump at a press conference with Japanese Prime Minister Shinzo Abe on August 25. The leaders hope to sign a formal agreement at the next meeting of the UN General Assembly, which convenes on September 17.
Details remain under wraps, but the broad outlines of the accord are known. Japan will lower its tariffs on a range of U.S. farm products, allowing us to boost our sales by as much as $7 billion to a country that is already our third-largest agricultural market.
The agreement, said U.S. Trade Representative Robert Lighthizer, “will be a major benefit for beef, pork, wheat, dairy products, wine, ethanol, and a variety of other products.”
Let’s hope so. For two years, I haven’t sold any of my wheat, which we harvest each July. The bounties of 2018 and 2019 remain locked up in warehouses, waiting for markets that have vanished because of our trade disputes. Prices are simply too low: I can’t sell my wheat right now and remain the owner of an economically sustainable farm.
So I’m hoping improved access to Japan’s market will help. It should also fuel sales for my other major crop: alfalfa seed. I sell these seeds to farmers who produce the hay that beef and dairy producers need. If they enjoy better business with Japan, some of their new revenue will trickle down to me.
Yet as much as I’m happy to hear about this new trade agreement, the reality is bittersweet. We aren’t gaining a new market as much as recovering an old one. Over the last few years, farmers in Canada and Australia have swooped into Japan and taken advantage of markets that once were ours.
The reason is simple: They’re part of the Trans-Pacific Partnership and the U.S. is not.
TPP (now recognized as CPTPP) is a regional agreement between Japan and 10 other nations along the rim of the Pacific Ocean. To improve trade ties, they’ve agreed to lower tariffs on each other’s products.
The United States initially was a party to TPP. Yet in one of his first acts as president, Trump withdrew.
The remaining TPP nations went ahead and ratified the accord anyway. As a result, U.S. farmers and others lost export opportunities in countries whose combined gross domestic product approaches $15 trillion.
Separately, Japan negotiated a trade agreement with the EU, putting the United States at an additional disadvantage.
Trump’s new agreement is like a mini-TPP, binding us closer to a single TPP country on a limited range of goods and services. (In addition to agriculture, the new deal apparently includes digital commerce and some manufacturing.)
So we’ve taken a step forward, but only after having taken two steps back.
Don’t get me wrong: I’m all for forward progress. Let’s take that step forward. I just want to see a lot more of these steps.
Congress probably will have to approve the agreement with Japan, though Senate Finance Chairman Charles Grassley of Iowa has said that under certain circumstances, this may not be necessary. One thing Congress definitely must do is ratify the United States-Mexico-Canada Agreement, the Trump administration-negotiated successor to NAFTA.
We’re still waiting for that.
And there is still China. From day to day, it’s hard to tell whether our trade war with the Chinese is heating up or cooling down; but it’s certainly ongoing, and it continues to devastate American farmers whose sales to the world’s most populous and hungry country have dried up.
You know what I think really would help? Having second thoughts about TPP – and rejoining it as a full member.
In the meantime, let’s just be glad that if this agreement with Japan becomes official, American farmers and businesses have more opportunities to sell and buy tomorrow than they do today.
Mark Wagoner is a third-generation farmer in Walla Walla County, Washington where they raise alfalfa seed. Mark volunteers as a Board member for the Global Farmer Network (www.globalfarmernetwork.org).