Which fruits stand to benefit most from U.S.-Japan trade deal?

August 27 , 2019

The recently announced U.S.-Japan trade deal could greatly improve market access for a numerous fruits, including citrus and grapes.

Officials have not yet provided details of the deal, which was announced by President Donald Trump and Prime Minister Shinzo Abe at the Group of Seven (G7) Summit on the weekend and could be signed next month.

However, Japan has high tariff rates for a number of agricultural imports, and so any reduction or phase-out could significantly boost U.S. farmers.

Earlier this year Japan indicated that it was willing to offer the U.S. the same terms as member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, previously the TPP) regarding agricultural tariffs.

U.S. Trade Representative Robert Lighthizer said the deal covered agriculture, industrial tariffs and digital trade. Much of the focus on the agricultural aspects of the deal has been on U.S. corn exports.

Lighthizer noted that Japan imports about US$14bn worth of U.S. agricultural products and said the agreement would open up markets to over US$7bn of such products. He said wheat, dairy products, wine, ethanol and a "variety of other products" would all benefit from the deal.

“It will lead to substantial reductions in tariffs and non-tariff barriers across the board,” he said.

Japan's tariff rates for key U.S. fruit imports

In 2018, the U.S.'s leading fruit exports to Japan included dried grapes (US$84m), lemons (US$68m), oranges (US$68m), fresh grapes (US$45m), cherries (US$29m), strawberries (US$24m) and grapefruit (US$22m).

Fresh grapes are subject to a 17% tariff from March through October and 7.8% from November through February. Dried grapes were subject to 10%. These rates have been eliminated for CPTPP members.

Japan doesn't set a duty on lemon imports, but U.S. oranges face a 16% tax from June through November and 32% from December through June. Grapefruit is subject to 10%. For CPTPP members, orange and grapefruit tariffs will be phased out over six to eight years.

Meanwhile, U.S. fresh cherries and strawberries are subject to tariffs of 8.5% and 6% respectively. For CPTPP members these duties were eliminated immediately.

'Significant export opportunities', says Western Growers

On Monday afternoon, Western Growers CEO Tom Nassif said the major association was "extremely pleased" to learn a deal in principle had been reached.

"We are encouraged that the agreement will lead to substantial reductions in tariff and non-tariff barriers to access to the Japanese market, which will level the playing field for U.S. farmers, in particular, producers of fruits, vegetables and tree nuts," he said.

But he noted that of equal importance to tariffs is the need for sanitary and phytosanitary (SPS) reforms. He said Japan’s current SPS regulatory regime prohibits many high-quality U.S. fruits, vegetables and tree nuts from entering the market.

“The anticipated reductions in tariffs and SPS barriers will result in true market gains and much needed economic relief for an industry that has already been caught in the crosshairs of trade wars on other fronts," he said.

“We applaud the efforts of President Trump, Prime Minister Abe and trade representatives from both countries to secure a mutually beneficial deal that will result in significant export opportunities for Western Growers members and the broader agricultural industry.”

 

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