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How agreements with Japan & Taiwan may impact NE farmers

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Posted at 2:10 PM, Sep 25, 2019
and last updated 2019-09-25 16:23:47-04

OMAHA, Neb. (KMTV) — Earlier this month, the Nebraska Farm Bureau said the tariff war could cost state agricultural producers nearly a $1 billion. Today, Nebraska Governor Pete Ricketts and the White House announced trade deals for national and state agricultural goods.

See also: Trade is vital to Nebraska's agricultural industry

According to a release from Ricketts' office, officials from Taiwan signed letters of intent, agreeing to purchase "more than $2.1 billion in U.S. soybeans, corn, and distillers grains."

Taiwanese officials visited Lincoln in 2019 to show their continued-interest in U.S. agricultural products Ricketts says.

“The United States supplies more than one-quarter of Taiwan’s major agricultural imports, and Nebraska has been a key supplier to the country for decades,” said Gov. Ricketts. “Signing these letters of intent builds on Nebraska’s existing trade relationship with Taiwan. It also positions us to grow the market for our quality agricultural products in Taiwan.”

The first letter of intent promises:

One outlines the Taiwan Feed Industry Association’s intent to purchase 197 million bushels of U.S. corn and 0.5 million metric tons of U.S. distillers grains with solubles in 2020 and 2021. These products are valued at approximately $1.1 billion. According to USDA’s Foreign Ag Service, in 2018, Taiwan was Nebraska’s fifth largest export market for corn. Out of Nebraska’s total corn export value of nearly $1.5 billion for 2018, Nebraska sent $70.2 million worth of corn to Taiwan. David Bruntz, Chair of the Nebraska Corn Board, was on hand Tuesday night to sign the letter of intent on behalf of Nebraska corn farmers.

A second letter outlines the Taiwan Vegetable Oil Manufacturers Association’s intent to purchase between 96 million and 97 million bushels of U.S. soybeans over the next two years. That purchase represents an estimated value of $1.0 to $1.1 billion. Eugene Goering, Vice Chair of the Nebraska Soybean Board, signed the letter of intent representing soybean farmers in the state.

In addition to the deals with Taiwan, the White House says President Donald Trump has reached agreements with Japan to "rebalance" trade between both nations by eliminating or significantly reducing tariffs on U.S. goods imported to Japan.

Trump says, “We’re going to have a really great relationship, better than ever before on trade. I think it’s going to be better for Japan and better for the United States.”

Nebraska's Corn Board provided the following regarding the deal with Japan:

The Nebraska Corn Board and the Nebraska Corn Growers Association welcomed today’s news regarding an agreement reached between the United States and Japan. This agreement was signed by President Trump this morning and will ensure fair trade with a longstanding trade partner. In the agreement, Japan will be lowering tariffs on U.S. agricultural products, including corn, by $7 billion.

“Japan is now the second largest buyer of U.S. corn,” said David Bruntz, chairman of the Nebraska Corn Board and farmer from Friend. “With the tough times we’ve been experiencing in agriculture, this is a step in the right direction and we look forward to the details being released on this comprehensive trade deal.”

“Japan has always been a loyal partner with our American ag industry,” said Dan Nerud, president of the Nebraska Corn Growers Association and farmer from Dorchester. “In the recent marketing year alone, Japan purchased more than $2 million in U.S. corn. This agreement is also an important step in the right direction for future ethanol exports.”

The details of the agreement released today show this pact would bring corn exports back in line with the Trans-Pacific Partnership (TPP) agreement, which was supported by Nebraska Corn. This puts U.S. corn on a level playing field with other current Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) countries. Nebraska Corn thanks the President for signing the agreement and looks forward to moving forward with this new trade pact.

Nebraska Senator Deb Fischer has also thrown her support behind the deal with Japan:

“Nebraska welcomes this trade deal between the U.S. and Japan, which is the top export destination for Nebraska beef and a major buyer of our state’s many agricultural products. I thank President Trump for negotiating this deal. Congress should build off this deal by passing USMCA and providing certainty to our farmers and producers.”

Governor Ricketts is also praising the Japan agreement:

“The agreement signed today is a big win for the Beef State,” said Gov. Ricketts. “For four years now, we have been working to get a trade deal done with Japan because it is Nebraska’s largest export market for ag exports including our beef, pork, and eggs. Thank you to President Trump for the personal attention he’s paid to working with our Japanese friends to get this deal done. This agreement will help ensure that our quality ag products remain affordable to our Japanese customers for years to come.”

The Office of the United States Trade Representative has provided the following details regarding the deal:

1. LIBERALIZING MARKET ACCESS BETWEEN THE UNITED STATES AND JAPAN

The United States and Japan have reached an agreement in which Japan will eliminate or lower tariffs for certain U.S. agricultural products. For other agricultural goods, Japan will provide preferential U.S.-specific quotas.

Once this agreement is implemented, over 90 percent of U.S. food and agricultural products imported into Japan will either be duty free or receive preferential tariff access. For example, under the agreement, Japan will:

  • Reduce tariffs on products such as fresh and frozen beef and pork.
  • Provide a country-specific quota for wheat and wheat products.
  • Reduce the mark-up on imported U.S. wheat and barley.
  • Immediately eliminate tariffs for almonds, walnuts, blueberries, cranberries, sweet corn, grain sorghum, broccoli, and more.
  • Provide staged tariff elimination for products such as cheeses, processed pork, poultry, beef offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products, and tomato paste.

This agreement provides for the limited use of safeguards by Japan for surges in imports of beef, pork, whey, oranges, and race horses, which will be phased out over time.

When the agreement is implemented by Japan, American farmers and ranchers will have the same advantage as CP-TPP countries selling into the Japanese market.

The United States will provide tariff elimination or reduction on 42 tariff lines for agricultural imports from Japan valued at $40 million in 2018, including products such as certain perennial plants and cut flowers, persimmons, green tea, chewing gum, and soy sauce.

The United States will also reduce or eliminate tariffs on certain industrial goods from Japan such as certain machine tools, fasteners, steam turbines, bicycles, bicycle parts, and musical instruments.

2. CONCLUDING A HIGH-STANDARD DIGITAL TRADE AGREEMENT

The United States and Japan have reached a separate agreement on a high-standard and comprehensive set of provisions addressing priority areas of digital trade. These areas include:

  • Prohibitions on imposing customs duties on digital products transmitted electronically such as videos, music, e-books, software, and games.
  • Ensuring non-discriminatory treatment of digital products, including coverage of tax measures.
  • Ensuring barrier-free cross-border data transfers in all sectors.
  • Prohibiting data localization requirements, including for financial service suppliers.
  • Prohibiting arbitrary access to computer source code and algorithms.
  • Ensuring firms’ flexibility to use innovative encryption technology in their products.

The digital trade agreement with Japan meets the gold standard on digital trade rules set by the USMCA and will expand trade in an area where the United States is a leader.