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U.S. ag groups see bright spots in Asian trade pacts


WASHINGTON, D.C. — Negotiations with some U.S. trading partners may still be strained, but an agreement with South Korea has been signed.

The revised U.S.-Republic of Korea Free Trade Agreement (KORUS) was signed by President Donald Trump and President Moon Jae last week. While much of the agreement remains the same regarding agriculture, the beef industry will see a benefit in the coming decade.

When the initial agreement was signed in 2007, the duty rate on U.S. beef was 40 percent. It has been reduced to about 21 percent. The new agreement will continue to decrease the tariff each year until it is eliminated in 2026.

This means the cost of U.S. beef in the South Korean market will continue to decline, but increased sales are difficult to estimate, said Lia Biondo, director of policy and outreach at U.S. Cattlemen’s Assoc. (USCA). American producers sent $7.2 billion in beef products to South Korea in 2017, making it one of the biggest markets for U.S. beef.

“Exports are very important to the domestic beef industry,” she said, adding the export market is an important part of supporting young and beginning farmers.

Most people in agriculture wanted to see no changes in KORUS, but the beef industry was one exception and they are happy with the change, Biondo added.

Last week as well, Trump and Japanese Prime Minister Shinzo Abe released a joint statement about the importance of a strong relationship between the two countries, “recognizing that our economies together represent approximately 30 percent of global gross domestic product.”

Japan and the United States were expected to be part of the Trans-Pacific Partnership (TPP) trade pact before Trump withdrew the U.S. from negotiations in 2017 just short of the signing stage. The remaining 11 countries in the agreement then signed the renamed Comprehensive and Progressive Trans-Pacific Partnership, or CPTPP.

Trump has voiced his support of bilateral agreements rather than multi-country agreements, while the Japanese government has continued to try to get the U.S. to rejoin the CPTPP.

An existing agreement with Australia is of concern for the U.S. beef industry. Signed in 2015, the tariff on Australian beef into Japan’s market has already started to drop, from the almost 40 percent of 2015 to 32 percent. The tariff will continue to drop over the next decade until it is 23.5 percent.

U.S. beef imports there are still subject to a 50 percent tariff if the imports pass a certain marker.

Japan is one of the largest importers of beef and consumer of beef per capita in the world. The citizens of Japan want U.S. beef, Biondo said; but that desire for may not be able to compete with the price differential caused by the tariffs.

The U.S. was the largest exporter of beef to the Japanese market from 2010-16. Two years ago, Australia passed the U.S in that market, with exports totaling $1.8 billion.

Aware of the increased pressure in that market, Biondo said a trade agreement with Japan was one of the first things the USCA asked the Trump administration to address. As a result, last week’s joint statement was welcome. It showed that Trump and Abe are still working toward an agreement.

The population of Asian countries continues to grow and demand more meat, especially from U.S. markets, she said. And, the demand benefits U.S. farmers a second way – the types of meat demanded overseas is drastically different than what is demanded in the United States.

Biondo said U.S. consumers want higher-price cuts of meat, like thick ribeye steaks. Asian countries want smaller sizes, like strip steak and stir-fry portions. Asian countries also consume much of the organ meat that U.S. diners avoid.

“I think some of the success we’ve seen with Japan and Korea can be applied to other trade agreements,” she said, adding that Trump’s administration is putting American workers first.

She would like to see the administration continue to push for American farmers in the North American Free Trade Agreement. Country-of-origin labeling, or COOL, is still an opportunity.

Japan is a top export market for U.S. corn, too. Since the U.S. withdrawal from TPP, the National Corn Growers Assoc. (NCGA) has urged the administration to re-engage the nation in trade talks. NCGA President Kevin Skunes said the news that talks will begin is welcomed by U.S. farmers.

Japan is the third-largest export market for U.S. animal feed, with nearly $880 million worth of feed, feed ingredient and pet food products exported there. Gina Tumbarello, director of international policy and trade at the American Feed Industry Assoc., said withdrawing from the TPP left a large void in the U.S. animal food industry’s ability to compete in Asian markets.

The news of talks with Japan is a positive step, when many in the agriculture community have seen opportunities to do business with the Asia-Pacific region dwindle.

“We encourage the administration to move quickly in its negotiation process so U.S. animal food manufacturers can enjoy expanded opportunity in Japan,” she said.