Peanut Market News October 09, 2019
The United States and Japan signed the U.S.-Japan Trade Agreement on October 7, 2019. One of the Trump Administration's most important goals was to get an early deal with Japan that would enable American farmers, ranchers, and agribusinesses to remain competitive in the face of other countries having preferential tariffs in the Japanese market. This agreement opens markets and will support expansion of U.S. food and agricultural exports, increase farm income, generate more rural economic activity, and promote job growth.
Nationwide, U.S. food and agricultural exports totaled nearly $145 billion in 2018, supporting more than one million American jobs. Global demand for these products is growing but so is competition among suppliers. When implemented by Japan, American farmers, ranchers, and agribusinesses will be able to compete on an even playing field with CP-TPP countries for many of the products that the United States exports into the Japan market.
Japan’s $5.0 trillion economy is the third largest in the world, and a trade agreement between the United States and Japan is of particular importance, since Japan is already the United States’ fourth?largest agricultural export market.
In the U.S.-Japan Trade Agreement, Japan has committed to provide substantial market access for the United States by either phasing out most tariffs (many immediately), enacting meaningful tariff reductions, or allowing a specific quantity of imports at a lower duty (generally zero) where tariff elimination is not possible. Importantly, the tariff treatment for the products covered in this agreement with the United States will match the tariffs that Japan provides preferentially to countries in the CP-TPP agreement.
President Trump and Prime Minister Abe have agreed that these early outcomes will be followed by further negotiations to address remaining areas of interest to each government. The United States and Japan will continue working to achieve a comprehensive trade agreement that results in a more fair and reciprocal trade and economic relationship.
KEY ELEMENTS OF THE AGREEMENT
Peanuts: Japan imported about $36 million of U.S. peanuts and peanut products in 2018, including $5 million of U.S. peanut butter. Japan maintains a 75,000?ton WTO TRQ for peanuts, which has an out?of?quota duty of 617 yen per kilogram (approximately 593?737 percent ad valorem equivalent). Japan will immediately eliminate the 10 percent in?quota tariff. Japan will also eliminate its 12 percent tariff on U.S. peanut butter over five years. Peanut oil tariffs, currently as high as 10.4 yen/kg (approximately 5.6 percent ad valorem equivalent), will be eliminated in 10 years. Similarly, tariffs for prepared and preserved peanuts, currently as high as 23.8 percent, will be eliminated in eight years.