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U.S. Wheat to Maintain Competitiveness in Japan

11.10.2019 13:55 "Agro Perspectiva" (Kyiv) According to the report of the USDA Grain: World Markets and Trade (October 2019), on October 7, 2019, the United States and Japan signed the U.S.-Japan Trade Agreement. This Agreement enhances market access, allowing American farmers and ranchers to remain competitive to other countries receiving preferential treatment in Japan. Since the United States withdrew from the Trans-Pacific Partnership in January 2017, uncertainty for U.S. agricultural competitiveness developed as signs of a trade agreement with Japan appeared bleak. Concerns grew as the remaining 11countries progressed forward to implement the multilateral agreement without the United States, renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), followed by another agreement between Japan and the European Union. Japan is not only the third-largest agricultural export market for the United States, but also the third-largest market for U.S. wheat exports. Historically, Japan has been a steady buyer of U.S. wheat as Japanese millers have long held a preference for its quality characteristics. In 2018/19, Japan imported a total of 5.7million tons of wheat and wheat products with the United States as its largest supplier accounting for 48percent of imports. Japan mainly imports 3classes of U.S. wheat: Soft White, Hard Red Spring (HRS), and Hard Red Winter (HRW). HRS and HRW together account for about two-thirds of U.S. wheat exports to Japan and are direct competitors to Canadas Western Red Spring. Without the U.S.-Japan Trade Agreement, Canadas duty-free countryspecific quota (CSQ) and markup reduction would put the United States at a competitive disadvantage. Australia will also a receive duty-free CSQ and markup reduction; however, Australias medium-soft wheat is more comparable to Japanese wheat. Concerns for U.S. wheat export competitiveness to Japan have eased as the Agreement was concluded. Once implemented, U.S. wheat will receive the same markup reduction as CPTPP members and a specified quantity of imports at a preferential tariff rate, generally zero, through the creation of a CSQ. The success of this Agreement will level the playing field for U.S. wheat exports to Japan and allow U.S. wheat to maintain its share of the Japanese market.

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