“Stage One” U.S.-Japan Agreement: Agriculture
“Stage One” U.S.-Japan Agreement:
October 21, 2020
Agriculture
Anita Regmi
On October 7, 2019, the United States and Japan signed the U.S.-Japan Trade Agreement
Specialist in Agricultural
(USJTA), which provides for limited tariff reductions and quota expansions to improve U.S.
Policy
access to Japan’s market, covering mostly agricultural products. The agreement, which entered
into force January 1, 2020, also provides for reciprocal U.S. tariff reductions, largely on
industrial goods. Japan previously negotiated agricultural market access provisions with the
United States in the context of the Trans -Pacific Partnership (TPP), a 2016 agreement among 12
Pacific-facing nations that the United States did not ratify. Those provisions were folded into the agreement that the
remaining TPP countries agreed upon—the Comprehensive and Progressive Agreement for Trans-Pacific Partnership
(CPTPP)—that went into force for Japan on December 30, 2018.
In addition to the CPTPP, Japan recently ratified one other preferential trading agreement, the Japan-European Union
Economic Partnership Agreement (JEEPA). Both agreements, which are comprehensive in scope, lowered Japan’s barriers to
agricultural imports from the European Union (EU) member countries and the CPTPP participants, placing U.S. exporters at
a disadvantage in certain ways. In the “Stage-One” agricultural agreement, the Trump Administration sought to address the
tariff-related disadvantages faced by U.S. agricultural exporters in the Japanese market, leaving other matters for future
negotiation.
Under USJTA, Japan agreed to accelerate and adjust its tariff-rate quota expansion and tariff reduction schedule such that
Japan’s imports of affected U.S. agricultural products would receive the same level of market access as imports from the
CPTPP countries. Under USJTA, Japan agreed to improve access for U.S. meat products, fruit, vegetables, most grains,
dairy, and processed products. While Japan’s tariff schedule under the USJTA attempts to match the CPTPP schedule, the
USJTA excludes some quotas that the United States had negotiated with Japan under the TPP. These TPP quotas excluded
from USJTA cover imports of U.S. rice that was specific to the United States and other quotas that are open to all CPTPP
members. The latter cover barley and barley products other than malt; butter; skim and other milk powder; cocoa products;
evaporated and condensed milk; edible fats and oils; vegetable preparations; coffee, tea, and other preparations; chocolate,
candies, and confectionary; and sugar.
The USJTA is narrower in scope than either the CPTPP or JEEPA. Because of the legal authority under which the United
States negotiated the USJTA, the agricultural provisions address only market access—border controls such as tariffs and
quotas—and do not include non-tariff measures. The USJTA does not have provisions on trade of organic products, sanitary
and phytosanitary measures, technical barriers to trade, agricultural biotechnology, and geographical indications. As a result,
U.S. agricultural exporters may continue to be disadvantaged in the Japanese market against those from the CPTPP countries
or the EU. Lack of legal text on non-market-access provisions in the USJTA may preclude the United States from seeking
recourse if Japan were to align its requirements for agricultural imports more closely with those of the EU or of other CPTPP
countries.
Japan is an important market for U.S. farmers and ranchers, accounting for about 9% of total U.S. agricultural exports to all
destinations since 2014. In 2019, U.S. agricultural exports to Japan were $11.7 billion in value, of which corn, beef, pork,
soybeans, and wheat made up more than 60%. This was lower than the $12.9 billion in 2018, as CPTPP countries eroded the
Japanese market for U.S. exporters , among other factors.
The USJTA and the approach that the Trump Administration took to negotiate it represent a significant shift in U.S. trade
policy. Given its constitutional authority to regulate foreign commerce, Congress may reflect on whether this shift aligns with
congressional objectives. Congress may also consider the impact of the agreement on the U.S. economy, including the
implications of negotiating a broader second-stage deal with Japan and the possible effects of a staged approach on the
United States’ ability to achieve additional agreements. Congress may also wish to consider the best approach to advancing
agricultural interests in the next stage of talks with Japan, as well as the potential costs and benefits of U.S. participation in
comprehensive agreements such as the CPTPP.
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Contents
Introduction ................................................................................................................... 1
Agricultural Provisions of the U.S.-Japan Trade Agreement ................................................... 1
Key Market Access Provisions for U.S. Agricultural Products .......................................... 2
Provisions Affecting U.S. Imports from Japan ................................................................ 4
Japan’s Other Trade Agreements and U.S. Exports ............................................................... 4
Market Access: Comparison with JEEPA and CPTPP ........................................................... 7
Japan Is an Important Market for U.S. Agriculture................................................................ 8
Issues for Congress ....................................................................................................... 10
Figures
Figure 1. U.S. Agricultural Exports to Japan, 2014-2019 ....................................................... 9
Contacts
Author Information ....................................................................................................... 12
Congressional Research Service
“Stage One” U.S.-Japan Agreement: Agriculture
Introduction
On October 7, 2019, the United States and Japan signed the U.S.-Japan Trade Agreement
(USJTA), which provides for limited tariff reductions and quota expansions to improve U.S.
access to Japan’s market, covering mostly agricultural products. The agreement, which entered
into force January 1, 2020, also provides for reciprocal U.S. tariff reductions, largely on industrial
goods.
Japan previously negotiated agricultural market access provisions with the United States in the
context of the Trans-Pacific Partnership (TPP), a 2016 agreement among 12 Pacific-facing
nations1 that the United States did not ratify. Those provisions were folded into the agreement that
the remaining TPP countries agreed upon—the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP)—that went into force for Japan on December 30, 2018.2 As
Japan began to improve market access for CPTPP countries, various U.S. agricultural exports to
Japan became less competitive compared to Japanese imports from CPTPP countries.
In addition to the CPTPP, Japan recently ratified one other preferential trading agreement, the
Japan-European Union Economic Partnership Agreement (JEEPA).3 These agreements, which are
comprehensive in scope, lowered Japan’s barriers to agricultural imports from the 28 European
Union (EU) member countries, the four European Economic Area countries that do not belong to
the EU but accept EU trade rules,4 and the 10 other signatories to the CPTPP, placing U.S.
exporters at a disadvantage in certain ways. In the initial “Stage-One” USJTA, the Trump
Administration sought to address only the tariff-related disadvantages faced by U.S. agricultural
exporters in the Japanese market, leaving other matters for future negotiation. Negotiations for a
“Stage-Two” agreement have yet to begin.
Agricultural Provisions of the U.S.-Japan Trade
Agreement
Under the USJTA, the two countries agreed to provide increased market access for each other’s
agricultural products.5 Japan agreed to eliminate or reduce tariffs for certain U.S. agricultural
products and to provide preferential quotas for other U.S. agricultural products, essential y
providing the same level of market access to these products as provided to exports from countries
that are members of the CPTPP. According to the Office of the U.S. Trade Representative
(USTR), once al provisions of this agreement have been implemented, over 90% of U.S. food
and agricultural products imported into Japan will either enter duty free or receive preferential
1 T he T PP signatories included Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru,
Singapore, Vietnam and the United States.
2 New Zealand Ministry of Foreign Affairs and T rade, “ Comprehensive and Progressive Agreement for T rans-Pacific
Partnership, T ext and Resources,” February 21, 2018, at https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-
trade-agreements-in-force/cptpp/comprehensive-and-progressive-agreement-for-trans-pacific-partnership-text-and-
resources/.
3 For more information, see CRS In Focus IF11099, EU-Japan FTA: Implications for U.S. Trade Policy, by Cathleen
D. Cimino-Isaacs.
4 T hese are Switzerland, Norway, Iceland and Liechtenstein.
5 Office of the U.S. T rade Representative (UST R), “ U.S.-Japan T rade Agreement T ext,” October 7, 2019, at
https://ustr.gov/countries-regions/japan-korea-apec/japan/us-japan-trade-agreement-negotiations/us-japan-trade-
agreement -text.
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“Stage One” U.S.-Japan Agreement: Agriculture
tariff access.6 In turn, the United States agreed to reduce or eliminate tariffs on 42 agricultural
tariff lines for imports from Japan.
When CPTPP went into effect,7 Japan implemented its first set of tariff cuts and tariff-rate quota
(TRQ) expansions and followed these with a second and third round of tariff cuts and TRQ
expansions on April 1, 2019, and April 1, 2020. TRQs involve a two-tiered tariff scheme in which
imports within an established quota face lower tariff rates and imports beyond the quota face
higher tariff rates. Under USJTA, Japan agreed to accelerate and adjust its TRQ expansion and
tariff reduction schedule such that Japan’s imports of affected U.S. agricultural products would
receive the same level of market access as imports from CPTPP countries. This means that tariff
rates under the USJTA fal slightly faster than those under CPTPP. For example, under CPTPP,
tariffs on beef imports into Japan, previously 38.5%, were reduced to 27.5% in Year 1 and 26.6%
in Year 2 and are to reach 9% in Year 16. Under the USJTA, tariffs on Japanese imports of U.S.
beef were reduced to 26.6% in Year 1 and will reach 9% in Year 15.
Key Market Access Provisions for U.S. Agricultural Products
Japan agreed to reduce tariffs on meat products that collectively accounted
for $2.9 bil ion of U.S. exports to Japan in 2018, the base year for comparison.8
Tariffs on processed beef products, including beef jerky and meat extracts, wil
be eliminated in 5 to 15 years. Japan’s right to raise tariffs if imports of U.S. beef
exceed a specified level would be restricted and wil be eliminated if the
specified level is not exceeded9 for four consecutive fiscal years after Year 14.
Tariffs on pork muscle cuts wil be eliminated over nine years, and tariffs on
processed pork products will go to zero in Year 5. Certain fresh and frozen pork
products wil continue to be subject to Japan’s variable levies when import prices
are low, but the maximum variable rate wil be reduced by almost 90% by Year
9.10 As with beef, Japan’s right to raise tariffs if imports of U.S. pork exceed a
specified level are restricted. Japan will gradual y increase the amount of U.S.
fresh, chil ed, and frozen pork that can be imported annual y without triggering
additional tariffs, and such tariffs will be terminated at the end of Year 10.
6 UST R, “ U.S.-Japan T rade Agreement ,” Fact Sheet, September 2019, at https://ustr.gov/about-us/policy-offices/press-
office/fact -sheets/2019/september/fact-sheet-us-japan-trade-agreement#.
7 New Zealand Ministry of Foreign Affairs and T rade, “Comprehensive and Progressive Agreement for T rans-Pacific
Partnership (CPTPP) text and resources,” February 21, 2018, at https://www.mfat.govt.nz/en/trade/free-trade-
agreements/free-trade-agreements-in-force/cptpp/comprehensive-and-progressive-agreement -for-trans-pacific-
partnership-text-and-resources/.
8 T rade statistics in this section are for the year 2018, which serves as a base year for comparison. As CPT PP entered
into force in December 30, 2018, U.S. exports to Japan declined in 2019 and would be inappropriate for reference.
9 T his concerns safeguard tariffs, which are temporary increases applied when trade within a specific tariff line
increases beyond a certain threshold or import unit values fall below a threshold level. Japan has agreed to a specific
annual threshold for U.S. exports that would trigger safeguard tariffs, separate from the threshold it applies to beef
imports in general, and has also agreed to annual increases in the threshold for U.S. beef.
10 Under the “gate-price mechanism,” Japan charges a variable duty on pork and onions, based on the difference
between a specified price and the import unit value, so long as the import unit value is lower. T his may include specific
tariffs that are applied as a specific monetary value per quantitative unit (such as per ton or per kilogram) as well as ad
valorem tariffs that are applied as a percentage of the import value of a good. If the shipment’s import unit value is
above the specified price, only the ad valorem tariff is charged. See John Dyck and Shawn Arita, “ Japan’s Agri-Food
Sector and the T rans-Pacific Partnership,” Economic Inform ation Bulletin, Number 129, U.S. Department of
Agriculture (USDA), Economic Research Service (ERS), October 2014.
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“Stage One” U.S.-Japan Agreement: Agriculture
Japan eliminated tariffs immediately upon entry into force of the agreement
on selected products—including almonds, walnuts, blueberries, cranberries,
sweet corn, grain sorghum, and broccoli—that collectively accounted for $1.3
bil ion of U.S. exports to Japan in 2018. Tariffs on corn used for feed, the largest
U.S. agricultural export to Japan ($2.8 bil ion in 2018), were also eliminated
upon entry into force of the agreement.11
Japan is phasing out tariffs in stages for certain products that accounted for
$3 bil ion of U.S. exports in 2018, such as cheeses, processed pork, poultry, beef
offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products, and
tomato paste.
Japan agreed to provide country-specific quotas (CSQ) for some products,
which provide access to a specified quantity of imports from the United States at
a preferential tariff rate, general y zero. The CSQs provide these products the
same access into Japan as would have been accorded under the terms of the
unratified TPP. Products covered by CSQs include wheat, wheat products, malt,
processed cheese, glucose, fructose, corn starch, potato starch, and inulin.
Additional y, Japan agreed to create a single whey CSQ for the United States that
begins at 5,400 metric tons (MT) and grows to 9,000 MT in Year 10. This CSQ
combines the provisions of three separate CSQs for whey under the TPP
provisions: whey used in infant formula (3,000 MT); whey mineral concentrate
(4,000 MT); and whey permeate (2,000 MT).
Japan agreed to improve access for U.S. skim milk powder by introducing an
annual global tender for 750 MT of skim milk powder.12 This may not represent a
notable gain in market access given that the United States exported 713,000 MT
of skim milk powder in 2018.13
Japan agreed to reduce the government-mandated mark-up on imported U.S.
wheat and barley, imports of which are controlled by state trading enterprises.14
Japan agreed to limit the use of safeguard measures to control surges in
imports of U.S. whey, oranges, and race horses.
11 Note that Japan’s current tariff on soybeans, another important export commodity for th e United States, is zero.
12 UST R, “U.S.-Japan T rade Agreement T ext, Side Letter on Skimmed Milk Powder,” October 7, 2019, at
https://ustr.gov/sites/default/files/files/agreements/japan/Letter_Exchange_on_Skimmed_Milk_Powder.pdf. Note, the
global T RQ for skim milk powder under the CPT PP starts at 20,659 MT in Year 1 and reaches 24,102 MT in Year 10.
13 USDA, FAS, Dairy: World Markets and Trade, July 2019. Note that U.S. exports are for non-fat dry milk as defined
by United States standards and regulations, while skim milk powder is defined by an international standard appearing
in the Codex Alim entarius. Non-fat dry milk has protein content requirements and does not include food additives.
Under the Codex standard, skim milk powder can have a lower protein content than the level required by the U.S.
standard and can contain food additives. All U.S. non -fat dry milk meet the Codex skim milk powder requirement but
all skim milk powder may not meet the U.S. non -fat dry milk standard. For more, see American Dairy Products
Institute, “Nonfat Dried Milk and Skim Milk Powder –All T he Same or Different?” ADPI Intelligence, vol. 5, issue 1,
accessed October 2020, at https://www.adpi.org/Portals/0/Academy/Intel%20and%20Commentaries/
Nonfat%20Dried%20Milk%20and%20Skim%20Milk%20Powder%20%E2%80%93%20All%20the%20same%20or%
20different.pdf.
14 For more on this see, John Dyck and Shawn Arita, “Japan’s Agri-Food Sector and the T rans-Pacific Partnership,”
Econom ic Inform ation Bulletin, Number 129, USDA, ERS, October 2014.
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“Stage One” U.S.-Japan Agreement: Agriculture
Provisions Affecting U.S. Imports from Japan
The United States agreed to reduce tariffs on imports of certain perennial plants and cut flowers,
persimmons, green tea, chewing gum, certain confectionary products, and soy sauce. In a side
letter, the United States agreed to modify its tariff-rate quota (TRQ) for imports of Japanese
beef.15 The United States agreed to eliminate the 200 MT country-specific beef quota for Japan
and increase its quota for “other countries or areas” to 65,005 MT. This would enable Japan to
ship additional amounts of beef to the United States at low tariff rates under the increased “other
countries or areas” quota.16
Japan’s Other Trade Agreements and U.S. Exports
Japan’s agreement with the United States follows its recent preferential trading agreements with
other countries that have eroded U.S. shares of the Japanese markets for many agricultural
products. Japan is a party to two recent comprehensive agreements of this nature. CPTPP, which
was agreed upon by 11 countries but entered into force on December 30, 2018, for a subset of
countries, currently provides for the liberalization of agricultural trade among Australia, Canada,
Japan, Mexico, New Zealand, Singapore, and Vietnam.17 JEEPA entered into force on February 1,
2019.18 When the USJTA entered into force, these two agreements had already initiated a process
of expanding quotas and phasing out tariffs on various agricultural imports into the Japanese
market.
While the Trump Administration has stated that the USJTA should “enable American
[agricultural] producers to compete more effectively with countries that currently have
preferential tariffs in the Japanese market,”19 the USJTA is narrower in scope than either CPTPP
or JEEPA. In particular, because of the legal authority under which the United States negotiated
the USJTA, the agricultural provisions address only market access—border controls such as
tariffs and quotas—while CPTPP and JEEPA also address many other policies that may interfere
with trade in agricultural products.
Notably, the USJTA does not include a formal dispute settlement mechanism to enforce
commitments should either side take fault with the other’s implementation.20 Article 6 of the
15 UST R, “U.S.-Japan T rade Agreement T ext, Side Letter on Beef,” October 7, 2019, at https://ustr.gov/sites/default/
files/files/agreements/japan/Letter_Exchange_on_Beef.pdf. A side letter is an agreement that is not part of the primary
trade agreement, and is used to reach agreement on issues the primary agreement does not cover or that need
clarification, or to amend the primary agreement .
16 UST R, “U.S.-Japan T rade Agreement T ext, Side Letter on Beef,” October 7, 2019, at https://ustr.gov/sites/default/
files/files/agreements/japan/Letter_Exchange_on_Beef.pdf.
17 For the full text of the agreement see, New Zealand Ministry of Foreign Affairs and T rade, “ Comprehensive and
Progressive Agreement for T rans-Pacific Partnership (CP TPP),” February 21, 2018, at https://www.mfat.govt.nz/en/
trade/free-trade-agreements/free-trade-agreements-in-force/cptpp/comprehensive-and-progressive-agreement-for-trans-
pacific-partnership-text-and-resources/.
18 For the full text of the agreement see, the European Commission, “EU-Japan Economic Partnership Agreement,”
February 1, 2019, at https://ec.europa.eu/trade/policy/in-focus/eu-japan-economic-partnership-agreement/.
19 UST R, “ Agriculture‐Related Provisions of the U.S.-Japan T rade Agreement ,” Fact Sheet, September 2019, at
https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2019/september/fact -sheet -
agriculture%E2%80%90related.
20 T ypically, U.S. FT As include specific procedures for resolving disputes, which include the option to establish a
dispute settlement panel with possible punitive measures, including the withdrawal of trade concessions (i.e., a return
of tariffs to their pre-agreement levels), if the panel finds that a party failed to adhere to agreement provisions. See CRS
In Focus IF10645, Dispute Settlem ent in the WTO and U.S. Trade Agreem ents, by Ian F. Fergusson.
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“Stage One” U.S.-Japan Agreement: Agriculture
USJTA lays out a 60-day consultation process for resolving issues relating to “the operation or
interpretation” of the agreement as a means to resolve disputes relating to tariffs and quota
commitments, but lacks a binding resolution process.21 As a result, should a dispute arise, U.S.
agricultural exporters could be at a disadvantage in the Japanese market against those from the
CPTPP countries or from the EU. Lack of legal text on non-market-access provisions in the
USJTA may preclude the United States from seeking recourse if Japan were to align its non-tariff
measures for agricultural imports more closely with those of the EU or CPTPP countries,
although it could pursue this through the World Trade Organization (WTO). Among the subjects
that may be affected by these discrepancies are:
Agricultural biotechnology. The CTPPP includes provisions for cooperation and information
exchange among its 11 signatories to facilitate trade in products of agricultural biotechnology.22
The European Commission regulates agricultural biotechnology products, including imported
products, using the “precautionary principle,” prohibiting a product when there is doubt about its
safety rather than waiting for conclusive proof that it poses environmental or health risks. This
principle is also part of JEEPA.23 If Japan were to change its regulations to better align with the
EU’s, some U.S. exports now sold in Japan might no longer be permitted. Moreover, the EU has
stated that JEEPA “wil not change EU rules on hormone-treated beef or GMOs [genetical y
modified organisms]” and that “Japanese consumers also share the same concerns about GMOs
as their European counterparts.”24 As the USJTA does not include provisions on agricultural
biotechnology, it is not clear whether the agreement would protect U.S. exporters’ ability to sel
hormone-treated beef or products containing GMOs should Japan change its domestic regulations
on these subjects.
Geographical indications. The EU permits extensive use of geographical indications (GIs),
place names that identify a distinctive product originating in a certain region. These have become
a contentious international trade issue.25 For example, in the United States, “feta” is considered
the generic name for a type of cheese. However, “feta” refers to a specific variety of cheese
produced in Greece and is protected as a GI in Europe. As such, U.S cheese labeled “feta” may
not be imported for sale in the EU, where only feta produced in countries or regions that are
entitled to apply that name to cheese may be sold commercial y. An EU fact sheet on JEEPA
states that, “The EU-Japan EPA foresees full protection for more than 200 EU GIs (foodstuffs,
wines and spirits).”26 This could become an obstacle for U.S. exports to Japan of other types of
cheese such as asiago, fontina, and gorgonzola.27 Al of those names are trademarked
21 “UST R Cites Consultation Process as Primary Enforcement T ool in Japan Deal,” Inside U.S. Trade, October 15,
2019.
22 New Zealand Ministry of Foreign Affairs and T rade, CPT PP, T ext and Resources, Chapter 2, National T reatment
and Market Access for Goods, Section C, Agriculture, Article 2.27, T rade of Products of Modern Biotechnology ,”
February 21, 2018, at https://www.mfat.govt.nz/assets/T rans-Pacific-Partnership/Text/2.-National-Treatment-and-
Market -Access-for-Goods.pdf.
23 EU-Japan Economic Partnership Agreement, “An Introduction to the EU-Japan Economic Partnership Agreement,”
Fact Sheet, accessed September 2019, at https://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155718.pdf.
24 Ibid.
25 For more on this see, CRS Report R45728, Major Agricultural Trade Issues in the 116th Congress, coordinated by
Anita Regmi.
26 EU Business in Japan, “ EPA & Geographical Indications,” EU-Japan Center for Industrial Cooperation, accessed
September 2019, at https://www.eubusinessinjapan.eu/issue s/economic-partnership-agreement/epa-geographical-
indications.
27 Consortium for Food Names, “ Europe Won’t Own “Parmesan” and “Bologna” in Japan: Japan Rejects EU Attempts
T o Confiscate Many Generic Names,” December 20th, 2017; and also see letter from members of Congress to UST R,
September 20, 2019, at https://kind.house.gov/sites/kind.house.gov/files/9.20.19%20-
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“Stage One” U.S.-Japan Agreement: Agriculture
geographical indications in the EU but hitherto have not had a similar status in Japan. Certain
wines and sausages produced in the United States are also commonly sold under names that are
protected as GIs in the EU. As the USJTA does not address this issue, depending on the extent of
alignment of regulation in Japan with the EU on geographical indications, the United States may
not be able to export to Japan products sold under names that appear on the list of protected GIs
unless the exporters agree to market the products under names that are not protected in the EU.
The CPTPP includes provisions for determining a common name and a protected GI, and some
limited due-process commitments on GIs. These commitments ensure a formal process for raising
objections when new third-party agreements by one member potential y disadvantage the exports
of another. This process could constrain Japan’s adoption of EU rules on GIs.28
Sanitary and phytosanitary measures. CPTPP provides for the establishment of a committee on
sanitary and phytosanitary measures (SPS) related to trade rules and standards that address issues
of food safety, plant pests, and animal diseases.29 Lack of similar language in the USJTA could
potential y al ow U.S. exports of certain products to be excluded from Japan if the CPTPP SPS
Committee determines that certain chemicals used in the United States in food production or
processing create risks that exceed the levels specified by the committee.
Technical barriers to trade. Three annexes to CPTPP pertain to technical regulations, standards,
and the conformity assessment procedures relevant to food and agriculture. One of these
establishes parameters for labeling and certifying wine and distil ed spirits, including specifying
what information is permitted on the label and terms that may not be excluded, such as “chateau,”
“reserve,” and others.30
Another CPTPP annex provides that in adopting and applying technical regulations and standards,
CPTPP members are to limit information requirements to what is necessary to achieve legitimate
objectives and to assure commercial interests are protected by treating the confidentiality of the
information from other member states as it would for domestic products.31
The third relevant annex encourages CPTPP member countries that maintain requirements for
organic products to consider expeditiously any requests from other CPTPP members for
recognition or equivalence of standards, technical regulations, and other regulatory processes, and
to explain the reasons for the denial of any such requests.32 Moreover, it includes provisions for
“technical exchanges to support improvement and greater alignment of technical regulations,
%20UST R%20Japan%20T rade%20Agreement.pdf.
28 New Zealand Ministry of Foreign Affairs and T rade, CPT PP, T ext and Resources, Chapter 18, Intellectual Property,
Section E, Geographical Indications, February 21, 2018,” at https://www.mfat.govt.nz/assets/T rans-Pacific-Partnership/
T ext/18.-Intellectual-Property-Chapter.pdf.
29 For more information on SPS, see CRS Report R43450, Sanitary and Phytosanitary (SPS) and Related Non-Tariff
Barriers to Agricultural Trade, by Renée Johnson.
30 New Zealand Ministry of Foreign Affairs and T rade, CPT PP, T ext and Resources, Chapter 8, T echnical Barriers to
T rade, Annex 8-A Wine And Distilled Spirits,” February 21, 2018, at https://www.mfat.govt.nz/assets/T rans-Pacific-
Partnership/Text/8.-Technical-Barriers-to-Trade-Chapter.pdf.
31 New Zealand Ministry of Foreign Affairs and T rade, CPT PP, T ext and Resources, Chapter 8, T echnical Barriers to
T rade, Annex 8-F Proprietary Formulas For Prepackaged Foods and Food Additives,” February 21, 2018, at
https://www.mfat.govt.nz/assets/T rans-Pacific-Partnership/Text/8.-Technical-Barriers-to-Trade-Chapter.pdf.
32 New Zealand Ministry of Foreign Affairs and T rade, CPT PP, T ext and Resources, Chapter 8, T echnical Barriers to
T rade, Annex 8- G, Organic Products, February 21, 2018,” at https://www.mfat.govt.nz/assets/T rans-Pacific-
Partnership/Text/8.-Technical-Barriers-to-Trade-Chapter.pdf.
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standards or conformity assessment procedures that relate to the production, processing or
label ing of products as organic.”33
The USJTA does not contain similar provisions or annexes. At issue here is whether the
confidentiality of U.S. exporters wil be similarly protected under USJTA and whether
harmonization of label ing, organic regulations and standards by the 11 CPTPP members may not
align with those of the United States and thus cause a disadvantage.
Market Access: Comparison with JEEPA and CPTPP
Before USJTA, U.S. agricultural exports to Japan faced higher tariffs under WTO Most Favored
Nation (MFN) provisions than provided under the preferential tariffs and expanded tariff-rate
quotas available to members of CPTPP and JEEPA. In particular, imports from the United States
beyond the amounts covered by the in-quota rates faced, and may continue to face, high tariffs,
some exceeding 500%.34 Japan’s simple average MFN tariff on al agricultural imports was
15.5% in 2019. Almost 19% of the Japanese agricultural tariff lines had MFN tariff rates greater
than 15%.35 Many of the agricultural products subject to in-quota tariffs are subject to additional
mark-ups through the state trading system, making the products more expensive to Japanese
consumers. This may tend to suppress imports as suggested by unfil ed Japanese import quotas.
For example, in 2017 Japan imported 29% of the amount of whey for infant formula that it
al owed under the TRQ36 and the corresponding TRQ fil rates for skim-milk powder ranged
between 25% and 34%.37 Given that many TRQs go unfil ed and that over-quota tariff rates are
extremely high, relatively little trade occurs beyond the set quota levels.
According to USTR, Japan had stated a commitment to “match the tariffs” provided to CPTPP
member countries in the USJTA.38 While Japan’s tariff schedule under the USJTA attempts to
match the CPTPP schedule, the TRQ schedule fal s short of the CPTPP schedule, potential y
disadvantaging market access for some U.S. agricultural products. The USJTA does not make
provisions for a CSQ for U.S. rice, but Japan has made provisions for a CSQ for Australian rice
under CPTPP.39 CPTPP additional y includes provisions for global TRQs for barley and barley
products other than malt; butter; skim and other milk powder; cocoa products; evaporated and
condensed milk; edible fats and oils; vegetable preparations; coffee, tea, and other preparations;
33 Ibid, at no. 5.
34 World T rade Organization (WT O), “Japan and the WT O,” October 2020, at https://www.wto.org/english/thewto_e/
countries_e/japan_e.htm.
35 Ibid.
36 Whey for feed has a 0% in-quota tariff; whey for other uses have higher levels of tariff. Whey for in fant formula has
a 10% tariff. For more, see Meros Consulting, Analyzing the Im pact of the CPTPP and Japan -EU EPA on U.S. Dairy
Exports to Japan, January 2019, at http://www.usdec.org/Documents/
USDECReportonImpactofJapaneseFTAsUS%20Dairy%20ExportsJan2019.pdf .
37 Skim milk powder imported for Japan’ school lunch program is duty -free; other skim milk powder imports face a
25% tariff or a complex tariff of 21%+396 yen/kg. For more, see Meros Consulting, Analyzing the Im pact of the
CPTPP and Japan-EU EPA on U.S. Dairy Exports to Japan , January 2019, at http://www.usdec.org/Documents/
USDECReportonImpactofJapaneseFTAsUS%20Dairy%20ExportsJan2019.pdf .
38 UST R, “ Agriculture‐Related Provisions of the U.S.-Japan T rade Agreement ,” Fact Sheet, September 2019, at
https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2019/september/fact -sheet -
agriculture%E2%80%90related.
39 Under the T PP provisions, which the United States did not ratify, Japan had agreed to provide a U.S.-specific quota
for rice, which was to start at 50,000 MT in Year 1 and reach 70,000 MT in Year 13.
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chocolate, candies, and confectionary; and sugar. No corresponding TRQs are included in the
USJTA.
While the USJTA includes market access provisions similar to those provided for most U.S.
agricultural products in existing CPTPP language, as discussed, it does not expand access for
some U.S. agricultural products, including rice and other products that the United States had
negotiated global TRQs under the TPP. Additional y, CPTPP and JEEPA have given a head start
to exporters from CPTPP member countries and the EU, which may render it difficult for some
U.S. exporters to regain their markets in Japan. Nevertheless, the agreement takes a step toward
providing market access for most U.S. agricultural exports to Japan similar to that available to
members of the CPTPP, and these U.S. agricultural exports to Japan could benefit from the
USJTA.
Japan Is an Important Market for U.S. Agriculture
Japan is an important market for U.S. farmers and ranchers, accounting for about 9% of total U.S.
agricultural exports to al destinations since 2014.40 In 2018, Japan was the third-largest export
market, after Canada and Mexico, with $12.9 bil ion in U.S. agricultural exports—out of a total of
$140 bil ion—shipped to Japan. U.S. agricultural exports to Japan have somewhat mirrored U.S.
global exports, that reached a peak value in 2014 with higher grain prices. For example, U.S.
marketing year average price for corn was $3.70 per bushel in 2014, and reached $3.36 per bushel
in 2016, 41 leading to a decline in the value of U.S. corn exports to Japan (Figure 1). U.S. corn
prices have since increased, with marketing year averages of $3.61 per bushel in 2018 and $3.60
per bushel in 2019. U.S. corn exports to Japan, nevertheless, fel in 2019 as Japan imported
greater quantities of more competitively priced Brazilian corn.42
In 2019, as CPTPP countries further eroded the Japanese market for U.S. exporters, Japan fel
behind China to become the fourth-largest export market for U.S. agricultural products,
accounting for $11.7 bil ion in total agricultural exports. Corn, beef, pork, soybeans, and wheat
make up more than 60% of total U.S. agricultural exports to Japan (Figure 1).
With CPTPP and JEEPA entering into force in early 2018, exports from the EU and the CPTPP
member countries became more competitive for Japanese importers. According to Japanese
customs data,43 while Japan’s total imports in 2018 and 2019 were about the same, around $36
bil ion, imports from the United States declined by 1% in value from $9.3 bil ion in 2018 to $9.2
bil ion in 2019. A large domestic wheat crop reduced Japan’s imports of non-durum wheat by
10% in value in 2019 compared to the import value in 2018.44 Wheat exports from the United
States declined 15% in value, from $787 mil ion in 2018 to $672 mil ion in 2019. Imports from
countries covered by JEEPA increased, although from a lower base. For example, imports from
40 U.S. Census Bureau T rade Data, accessed via USDA, FAS, October 2020, at https://apps.fas.usda.gov/gats/
default.aspx. U.S. export statistics discussed in this section use the USDA definition of agriculture. T his includes all
products in Chapters 1-24 of the U.S. Harmonized T ariff Schedule (except for fishery products in Chapters 3 and 16,
manufactured tobacco products like cigarettes and cigars in Chapter 24, and spirits in Chapter 22); essential oils
(Chapter 33); raw rubber (Chapter 40); raw animal hides and skins (Chapter 4 1); and wool and cotton (Chapters 51-52).
41 USDA, World Agricultural Supply and Demand Estimates, historical database maintained by CRS.
42 A large crop coupled with a weak currency made Brazilian corn more competitive compared to U.S. corn. For more,
see USDA, FAS, “ Japan Grain and Feed Annual,” GAIN Report Number: JA2020-0058, March 19, 2020.
43 Accessed via T rade Data Monitor, October 2020. Note that U.S. export and Japan’s import data do not match since
there is a time lag for transport of shipments leaving U.S. ports and reaching their destination in Japan. Additionally,
import data include cost of transportation and insurance that are not taken into consideration in export values.
44 USDA, FAS, “Japan Grain and Feed Annual,” GAIN Report Number: JA2020-0058, March 19, 2020.
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“Stage One” U.S.-Japan Agreement: Agriculture
Germany increasing 100% (from $42,000 to $84,000) and from Bulgaria ($16,000 to $356,000)
and Romania (none in 2018 to $8.2 mil ion in 2019) growing over 2,000%.
Figure 1. U.S. Agricultural Exports to Japan, 2014-2019
In Nominal Bil ions (B) of U.S. Dol ars
Source: U.S. Census Bureau Trade Data, accessed via U.S. Department of Agriculture (USDA), Foreign
Agricultural Service (FAS), October 2020, https://apps.fas.usda.gov/gats/default.aspx.
Notes: The chart uses USDA’s definition of agriculture, including al of the products in Chapters 1 -24 of the U.S.
Harmonized Tariff Schedule (except for fishery products in Chapters 3 and 16, manufactured tobacco products
like cigarettes and cigars in Chapter 24, and spirits in Chapter 22); essential oils (Chapter 33); raw rubber
(Chapter 40); raw animal hides and skins (Chapter 41); and wool and cotton (Chapters 51 -52).
Similarly, Japan’s imports of pork from the United States declined over 11% in value from $1.7
bil ion in 2018 to $1.5 bil ion in 2019. Pork imports from the EU and the CPTPP countries
increased. For example, Japan’s pork imports from Germany grew 22% (from $135 mil ion to
$165 mil ion), Mexico 16% ($450 mil ion to $523 mil ion), Spain 11% ($552 mil ion to $614
mil ion), Netherlands 10% ($167 mil ion to $184 mil ion), and Canada 5% (from $1.1 bil ion to
$1.2 bil ion) during the same period. Much the same is true of beef: Japan’s 2019 imports of beef
from Canada, a CPTPP signatory, increased 90% compared with 2018 (from $144 mil ion to $174
mil ion), and its beef imports from New Zealand ($131 mil ion to $159 mil ion) and Mexico ($75
mil ion to $88 mil ion), both CPTPP signatories, increased 21% and 17% respectively. Japan’s
imports of U.S. beef declined 1% from $2.04 bil ion in 2018 to $2.01 bil ion in 2019, while total
Japanese beef imports increased 4% during the same period from $4.3 bil ion to $4.5 bil ion.
Given the reduced value of shipments of key U.S. products to Japan, U.S. agricultural exports to
Japan declined 9% from a value of $12.9 bil ion in 2018 to $11.7 bil ion in 2019 according to
Census Bureau data.45 Although the USJTA, resulting in lower tariff rates on most U.S.
45 U.S. Census Bureau T rade Data, accessed via U.S. Department of Agriculture (USDA), Foreign Agricultural Service
(FAS), Global Agricultural T rade System, accessed October 2020, at https://apps.fas.usda.gov/Gats/
ExpressQuery1.aspx.
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“Stage One” U.S.-Japan Agreement: Agriculture
agricultural products in the near term, should improve the outlook for U.S. agricultural exporters,
U.S. agricultural exports in 2020 have been hampered by the Coronavirus Disease 2019 (COVID-
19) pandemic. U.S. agricultural export value from January through July 2020 is 4% below the
level in 2019. USDA forecasts that U.S. exports to Japan may reach $11.6 bil ion for 2020, 1%
lower than the value of exports in 2019.46
Issues for Congress
The USJTA and the approach the Trump Administration took to negotiate it represent a significant
shift in U.S. trade policy.47 Given its constitutional authority to regulate foreign commerce,
Congress may reflect on whether this shift aligns with congressional objectives. The
Administration’s implementation of the Stage-One USJTA, without the approval of Congress, an
unprecedented move for U.S. free trade negotiations, has prompted debate among some Members
over the appropriate congressional role.48
Congress may wish to consider the impact of the agreement on the U.S. economy, including the
implications of completing (or not completing) a broader second-stage deal with Japan, and how
a staged approach affects the United States’ ability to negotiate additional agreements. The Stage-
One USJTA may have a modest overal effect on the U.S. economy, given that it covers a smal
share of bilateral trade, but it could be significant for the U.S. agricultural exporters that wil
enjoy improved access into the highly protected Japanese market.
USJTA did not improve market access for some agricultural products such as rice; barley and
barley products other than malt; butter; skim and other milk powder; cocoa products; evaporated
and condensed milk; edible fats and oils; vegetable preparations; coffee, tea, and other
preparations; chocolate, candies, and confectionary; and sugar. During the TPP negotiations,
Japan had agreed to improve access for six products that are sensitive for its agricultural sector—
beef, pork, dairy, wheat, rice, and sugar—because TPP would open access for Japanese products
into 11 markets.49 A bilateral negotiation with the United States does not provide the same
opportunity for Japan.
U.S. agricultural stakeholders50 and some Members of Congress have urged the Administration to
engage in a comprehensive “stage-two” negotiation.51 In particular, these Members want the
USJTA to offer market access to U.S. dairy products that is similar to that offered by Japan to
46 Bart Kenner and Hui Jiang, Outlook for U.S. Agricultural Trade, USDA, Economic Research Service (ERS), AES-
113, August 26, 2020.
47 For a broader discussion of issues, see CRS Report R46140, “Stage One” U.S.-Japan Trade Agreements,
coordinated by Brock R. Williams.
48 “Ways & Means Members Press UST R for Answers on U.S.-Japan T rade Agreement in Letter to Lighthizer,” Inside
U.S. Trade, November 27, 2019.
49 T estimony of Darci Vetter, House Ways and Means Subcommittee on T rade, U.S.-Japan Trade Agreements hearing,
116th Cong., 2nd sess., November 20, 2019, at https://waysandmeans.house.gov/sites/
democrats.waysandmeans.house.gov/files/documents/U.S.-
Japan%20T rade%20Agreements%20Hearing%20Transcript.pdf .
50 Comments from the Agriculture Policy Advisory Committee in the U.S. T rade Advisory Report, “Advisory
Committees Reports Pursuant T o T he Bipartisan Congressional T rade Priorities and Accountability Act of 2015 and
the T rade Act of 1974 T rade,” October 4, 2019.
51 Letter to U.S. T rade Representative Lighthizer from Representatives Ron Kind, Suzan DelBene, Gwen Moore, Mark
Pocan, and Peter Welch, September 20, 2019, at https://kind.house.gov/sites/kind.house.gov/files/9.20.19%20-
%20UST R%20Japan%20T rade%20Agreement.pdf.
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“Stage One” U.S.-Japan Agreement: Agriculture
CPTPP countries. They also emphasize the need to negotiate access for food products sold under
accepted common names and prevent these from being protected as GIs.52
A staged-partial bilateral agreement may al ow the United States to quickly reach an agreement to
improve access for selected goods so as to provide the same level of access to many U.S.
agricultural products that were disadvantaged by Japan’s agreements with the EU and with
CPTPP member countries. However, the full benefit of such an agreement may be contingent on
reaching a comprehensive agreement in follow-up negotiations. Japan may not view a second
stage bilateral agreement with the United States as being equivalent to an agreement with 11
trading partners, as under the CPTPP, and may be less inclined to provide access to U.S. rice,
sugar, and the remaining dairy products in subsequent negotiations.53
Congress may also wish to weigh the overal economic and geopolitical benefits to the United
States from a staged approach to a bilateral negotiation versus one involving a comprehensive
agreement. Some Members of Congress have raised concerns that the United States may be
withdrawing from its leadership role in Asia while China is actively engaged in negotiating the
Regional Comprehensive Economic Partnership.54 A bilateral agreement, such as the agreement
with Japan, may not al ow the United States to shape broader al iances in the Asia-Pacific region
or to play a significant role in shaping global trade rules and standards governing non-tariff
measures such as those relevant for GIs, agricultural biotechnology, or trade in organic products.
The limited scope of the USJTA commitments has led several analysts and some Members of
Congress to question the extent to which the agreement adheres to Article XXIV of the General
Agreement on Tariffs and Trade under the WTO.55 This provision requires regional trade
agreements outside the WTO to eliminate duties and other restrictive regulations of commerce on
“substantial y al trade” between the parties.56 The EU, Israel, China, Canada, and New Zealand
have also questioned Japan whether its Stage-One agreement with the United States conforms to
Japan’s obligations under its WTO commitments.57
Congress may wish to consider whether the Stage-One agreement is consistent with U.S.
obligations under the WTO. Congress may examine whether the limited scope of the agreement
sets precedents for other countries to negotiate other partial trade agreements that liberalize trade
52 Fifty-one Members of Congress Letter to U.S. T rade Representative Lighthizer and USDA Secretary Perdue, July 8,
2020, at https://kind.house.gov/media-center/press-releases/reps-kind-smucker-harder-and-marshall-lead-bipartisan-
letter-urging.
53 For a discussion of this, see testimony of Darci Vetter, House Ways and Means Subcommittee on T rade, U.S.-Japan
Trade Agreem ents hearing, 116th Cong., 2nd sess., November 20, 2019, at https://waysandmeans.house.gov/sites/
democrats.waysandmeans.house.gov/files/documents/U.S.-
Japan%20T rade%20Agreements%20Hearing%20Transcript.pdf .
54 Questions by Representative T erri A. Sewell to Ambassador Darci Vetter at the House Ways and Means
Subcommittee on T rade, U.S.-Japan Trade Agreem ents hearing, 116th Cong., 2nd sess., November 20, 2019, at
https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/U.S.-
Japan%20T rade%20Agreements%20Hearing%20Transcript.pdf ; and Fox Business News, “ Mornings with Maria
Interview with Sen. Marsha Blackburn,” August 3, 2020. T he Regional Comprehensive Economic Partnership is a
proposed free trade agreement in the Asia-Pacific region among Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, T hailand, and Vietnam, Australia, China, Japan, New Zealand, and South Korea.
55 “Analysts Question WT O Compliance of U.S.-Japan Deal,” Inside U.S. Trade, September 17, 2019.
56 T he WT O does not define “substantially all trade,” but member countries have generally interpreted it to mean 90%
of trade. For the provision text, see https://www.wto.org/english/docs_e/legal_e/gatt47_02_e.htm#articleXXIV. T he
General Agreement on T rade in Services (GAT S, Article V) has similar requirements for other trade agreements to
include “substantial sector coverage.”
57 Isabelle Isco, “Japan Defends U.S. T rade Deal Amid Scrutiny At T he WT O,” Inside U.S. Trade, October 15, 2020.
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“Stage One” U.S.-Japan Agreement: Agriculture
on a limited set of products or sectors that could potential y discriminate against the United
States, as wel as potential y undermine respect and adherence to the letter and spirit of the WTO.
Author Information
Anita Regmi
Specialist in Agricultural Policy
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should n ot be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.
Congressional Research Service
R46576 · VERSION 1 · NEW
12
October 21, 2020
Agriculture
Anita Regmi
On October 7, 2019, the United States and Japan signed the U.S.-Japan Trade Agreement
Specialist in Agricultural
(USJTA), which provides for limited tariff reductions and quota expansions to improve U.S.
Policy
access to Japan’s market, covering mostly agricultural products. The agreement, which entered
into force January 1, 2020, also provides for reciprocal U.S. tariff reductions, largely on
industrial goods. Japan previously negotiated agricultural market access provisions with the
United States in the context of the Trans -Pacific Partnership (TPP), a 2016 agreement among 12
Pacific-facing nations that the United States did not ratify. Those provisions were folded into the agreement that the
remaining TPP countries agreed upon—the Comprehensive and Progressive Agreement for Trans-Pacific Partnership
(CPTPP)—that went into force for Japan on December 30, 2018.
In addition to the CPTPP, Japan recently ratified one other preferential trading agreement, the Japan-European Union
Economic Partnership Agreement (JEEPA). Both agreements, which are comprehensive in scope, lowered Japan’s barriers to
agricultural imports from the European Union (EU) member countries and the CPTPP participants, placing U.S. exporters at
a disadvantage in certain ways. In the “Stage-One” agricultural agreement, the Trump Administration sought to address the
tariff-related disadvantages faced by U.S. agricultural exporters in the Japanese market, leaving other matters for future
negotiation.
Under USJTA, Japan agreed to accelerate and adjust its tariff-rate quota expansion and tariff reduction schedule such that
Japan’s imports of affected U.S. agricultural products would receive the same level of market access as imports from the
CPTPP countries. Under USJTA, Japan agreed to improve access for U.S. meat products, fruit, vegetables, most grains,
dairy, and processed products. While Japan’s tariff schedule under the USJTA attempts to match the CPTPP schedule, the
USJTA excludes some quotas that the United States had negotiated with Japan under the TPP. These TPP quotas excluded
from USJTA cover imports of U.S. rice that was specific to the United States and other quotas that are open to all CPTPP
members. The latter cover barley and barley products other than malt; butter; skim and other milk powder; cocoa products;
evaporated and condensed milk; edible fats and oils; vegetable preparations; coffee, tea, and other preparations; chocolate,
candies, and confectionary; and sugar.
The USJTA is narrower in scope than either the CPTPP or JEEPA. Because of the legal authority under which the United
States negotiated the USJTA, the agricultural provisions address only market access—border controls such as tariffs and
quotas—and do not include non-tariff measures. The USJTA does not have provisions on trade of organic products, sanitary
and phytosanitary measures, technical barriers to trade, agricultural biotechnology, and geographical indications. As a result,
U.S. agricultural exporters may continue to be disadvantaged in the Japanese market against those from the CPTPP countries
or the EU. Lack of legal text on non-market-access provisions in the USJTA may preclude the United States from seeking
recourse if Japan were to align its requirements for agricultural imports more closely with those of the EU or of other CPTPP
countries.
Japan is an important market for U.S. farmers and ranchers, accounting for about 9% of total U.S. agricultural exports to all
destinations since 2014. In 2019, U.S. agricultural exports to Japan were $11.7 billion in value, of which corn, beef, pork,
soybeans, and wheat made up more than 60%. This was lower than the $12.9 billion in 2018, as CPTPP countries eroded the
Japanese market for U.S. exporters , among other factors.
The USJTA and the approach that the Trump Administration took to negotiate it represent a significant shift in U.S. trade
policy. Given its constitutional authority to regulate foreign commerce, Congress may reflect on whether this shift aligns with
congressional objectives. Congress may also consider the impact of the agreement on the U.S. economy, including the
implications of negotiating a broader second-stage deal with Japan and the possible effects of a staged approach on the
United States’ ability to achieve additional agreements. Congress may also wish to consider the best approach to advancing
agricultural interests in the next stage of talks with Japan, as well as the potential costs and benefits of U.S. participation in
comprehensive agreements such as the CPTPP.
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Contents
Introduction ................................................................................................................... 1
Agricultural Provisions of the U.S.-Japan Trade Agreement ................................................... 1
Key Market Access Provisions for U.S. Agricultural Products .......................................... 2
Provisions Affecting U.S. Imports from Japan ................................................................ 4
Japan’s Other Trade Agreements and U.S. Exports ............................................................... 4
Market Access: Comparison with JEEPA and CPTPP ........................................................... 7
Japan Is an Important Market for U.S. Agriculture................................................................ 8
Issues for Congress ....................................................................................................... 10
Figures
Figure 1. U.S. Agricultural Exports to Japan, 2014-2019 ....................................................... 9
Contacts
Author Information ....................................................................................................... 12
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“Stage One” U.S.-Japan Agreement: Agriculture
Introduction
On October 7, 2019, the United States and Japan signed the U.S.-Japan Trade Agreement
(USJTA), which provides for limited tariff reductions and quota expansions to improve U.S.
access to Japan’s market, covering mostly agricultural products. The agreement, which entered
into force January 1, 2020, also provides for reciprocal U.S. tariff reductions, largely on industrial
goods.
Japan previously negotiated agricultural market access provisions with the United States in the
context of the Trans-Pacific Partnership (TPP), a 2016 agreement among 12 Pacific-facing
nations1 that the United States did not ratify. Those provisions were folded into the agreement that
the remaining TPP countries agreed upon—the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP)—that went into force for Japan on December 30, 2018.2 As
Japan began to improve market access for CPTPP countries, various U.S. agricultural exports to
Japan became less competitive compared to Japanese imports from CPTPP countries.
In addition to the CPTPP, Japan recently ratified one other preferential trading agreement, the
Japan-European Union Economic Partnership Agreement (JEEPA).3 These agreements, which are
comprehensive in scope, lowered Japan’s barriers to agricultural imports from the 28 European
Union (EU) member countries, the four European Economic Area countries that do not belong to
the EU but accept EU trade rules,4 and the 10 other signatories to the CPTPP, placing U.S.
exporters at a disadvantage in certain ways. In the initial “Stage-One” USJTA, the Trump
Administration sought to address only the tariff-related disadvantages faced by U.S. agricultural
exporters in the Japanese market, leaving other matters for future negotiation. Negotiations for a
“Stage-Two” agreement have yet to begin.
Agricultural Provisions of the U.S.-Japan Trade
Agreement
Under the USJTA, the two countries agreed to provide increased market access for each other’s
agricultural products.5 Japan agreed to eliminate or reduce tariffs for certain U.S. agricultural
products and to provide preferential quotas for other U.S. agricultural products, essential y
providing the same level of market access to these products as provided to exports from countries
that are members of the CPTPP. According to the Office of the U.S. Trade Representative
(USTR), once al provisions of this agreement have been implemented, over 90% of U.S. food
and agricultural products imported into Japan will either enter duty free or receive preferential
1 T he T PP signatories included Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru,
Singapore, Vietnam and the United States.
2 New Zealand Ministry of Foreign Affairs and T rade, “ Comprehensive and Progressive Agreement for T rans-Pacific
Partnership, T ext and Resources,” February 21, 2018, at https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-
trade-agreements-in-force/cptpp/comprehensive-and-progressive-agreement-for-trans-pacific-partnership-text-and-
resources/.
3 For more information, see CRS In Focus IF11099, EU-Japan FTA: Implications for U.S. Trade Policy, by Cathleen
D. Cimino-Isaacs.
4 T hese are Switzerland, Norway, Iceland and Liechtenstein.
5 Office of the U.S. T rade Representative (UST R), “ U.S.-Japan T rade Agreement T ext,” October 7, 2019, at
https://ustr.gov/countries-regions/japan-korea-apec/japan/us-japan-trade-agreement-negotiations/us-japan-trade-
agreement -text.
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“Stage One” U.S.-Japan Agreement: Agriculture
tariff access.6 In turn, the United States agreed to reduce or eliminate tariffs on 42 agricultural
tariff lines for imports from Japan.
When CPTPP went into effect,7 Japan implemented its first set of tariff cuts and tariff-rate quota
(TRQ) expansions and followed these with a second and third round of tariff cuts and TRQ
expansions on April 1, 2019, and April 1, 2020. TRQs involve a two-tiered tariff scheme in which
imports within an established quota face lower tariff rates and imports beyond the quota face
higher tariff rates. Under USJTA, Japan agreed to accelerate and adjust its TRQ expansion and
tariff reduction schedule such that Japan’s imports of affected U.S. agricultural products would
receive the same level of market access as imports from CPTPP countries. This means that tariff
rates under the USJTA fal slightly faster than those under CPTPP. For example, under CPTPP,
tariffs on beef imports into Japan, previously 38.5%, were reduced to 27.5% in Year 1 and 26.6%
in Year 2 and are to reach 9% in Year 16. Under the USJTA, tariffs on Japanese imports of U.S.
beef were reduced to 26.6% in Year 1 and will reach 9% in Year 15.
Key Market Access Provisions for U.S. Agricultural Products
Japan agreed to reduce tariffs on meat products that collectively accounted
for $2.9 bil ion of U.S. exports to Japan in 2018, the base year for comparison.8
Tariffs on processed beef products, including beef jerky and meat extracts, wil
be eliminated in 5 to 15 years. Japan’s right to raise tariffs if imports of U.S. beef
exceed a specified level would be restricted and wil be eliminated if the
specified level is not exceeded9 for four consecutive fiscal years after Year 14.
Tariffs on pork muscle cuts wil be eliminated over nine years, and tariffs on
processed pork products will go to zero in Year 5. Certain fresh and frozen pork
products wil continue to be subject to Japan’s variable levies when import prices
are low, but the maximum variable rate wil be reduced by almost 90% by Year
9.10 As with beef, Japan’s right to raise tariffs if imports of U.S. pork exceed a
specified level are restricted. Japan will gradual y increase the amount of U.S.
fresh, chil ed, and frozen pork that can be imported annual y without triggering
additional tariffs, and such tariffs will be terminated at the end of Year 10.
6 UST R, “ U.S.-Japan T rade Agreement ,” Fact Sheet, September 2019, at https://ustr.gov/about-us/policy-offices/press-
office/fact -sheets/2019/september/fact-sheet-us-japan-trade-agreement#.
7 New Zealand Ministry of Foreign Affairs and T rade, “Comprehensive and Progressive Agreement for T rans-Pacific
Partnership (CPTPP) text and resources,” February 21, 2018, at https://www.mfat.govt.nz/en/trade/free-trade-
agreements/free-trade-agreements-in-force/cptpp/comprehensive-and-progressive-agreement -for-trans-pacific-
partnership-text-and-resources/.
8 T rade statistics in this section are for the year 2018, which serves as a base year for comparison. As CPT PP entered
into force in December 30, 2018, U.S. exports to Japan declined in 2019 and would be inappropriate for reference.
9 T his concerns safeguard tariffs, which are temporary increases applied when trade within a specific tariff line
increases beyond a certain threshold or import unit values fall below a threshold level. Japan has agreed to a specific
annual threshold for U.S. exports that would trigger safeguard tariffs, separate from the threshold it applies to beef
imports in general, and has also agreed to annual increases in the threshold for U.S. beef.
10 Under the “gate-price mechanism,” Japan charges a variable duty on pork and onions, based on the difference
between a specified price and the import unit value, so long as the import unit value is lower. T his may include specific
tariffs that are applied as a specific monetary value per quantitative unit (such as per ton or per kilogram) as well as ad
valorem tariffs that are applied as a percentage of the import value of a good. If the shipment’s import unit value is
above the specified price, only the ad valorem tariff is charged. See John Dyck and Shawn Arita, “ Japan’s Agri-Food
Sector and the T rans-Pacific Partnership,” Economic Inform ation Bulletin, Number 129, U.S. Department of
Agriculture (USDA), Economic Research Service (ERS), October 2014.
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“Stage One” U.S.-Japan Agreement: Agriculture
Japan eliminated tariffs immediately upon entry into force of the agreement
on selected products—including almonds, walnuts, blueberries, cranberries,
sweet corn, grain sorghum, and broccoli—that collectively accounted for $1.3
bil ion of U.S. exports to Japan in 2018. Tariffs on corn used for feed, the largest
U.S. agricultural export to Japan ($2.8 bil ion in 2018), were also eliminated
upon entry into force of the agreement.11
Japan is phasing out tariffs in stages for certain products that accounted for
$3 bil ion of U.S. exports in 2018, such as cheeses, processed pork, poultry, beef
offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products, and
tomato paste.
Japan agreed to provide country-specific quotas (CSQ) for some products,
which provide access to a specified quantity of imports from the United States at
a preferential tariff rate, general y zero. The CSQs provide these products the
same access into Japan as would have been accorded under the terms of the
unratified TPP. Products covered by CSQs include wheat, wheat products, malt,
processed cheese, glucose, fructose, corn starch, potato starch, and inulin.
Additional y, Japan agreed to create a single whey CSQ for the United States that
begins at 5,400 metric tons (MT) and grows to 9,000 MT in Year 10. This CSQ
combines the provisions of three separate CSQs for whey under the TPP
provisions: whey used in infant formula (3,000 MT); whey mineral concentrate
(4,000 MT); and whey permeate (2,000 MT).
Japan agreed to improve access for U.S. skim milk powder by introducing an
annual global tender for 750 MT of skim milk powder.12 This may not represent a
notable gain in market access given that the United States exported 713,000 MT
of skim milk powder in 2018.13
Japan agreed to reduce the government-mandated mark-up on imported U.S.
wheat and barley, imports of which are controlled by state trading enterprises.14
Japan agreed to limit the use of safeguard measures to control surges in
imports of U.S. whey, oranges, and race horses.
11 Note that Japan’s current tariff on soybeans, another important export commodity for th e United States, is zero.
12 UST R, “U.S.-Japan T rade Agreement T ext, Side Letter on Skimmed Milk Powder,” October 7, 2019, at
https://ustr.gov/sites/default/files/files/agreements/japan/Letter_Exchange_on_Skimmed_Milk_Powder.pdf. Note, the
global T RQ for skim milk powder under the CPT PP starts at 20,659 MT in Year 1 and reaches 24,102 MT in Year 10.
13 USDA, FAS, Dairy: World Markets and Trade, July 2019. Note that U.S. exports are for non-fat dry milk as defined
by United States standards and regulations, while skim milk powder is defined by an international standard appearing
in the Codex Alim entarius. Non-fat dry milk has protein content requirements and does not include food additives.
Under the Codex standard, skim milk powder can have a lower protein content than the level required by the U.S.
standard and can contain food additives. All U.S. non -fat dry milk meet the Codex skim milk powder requirement but
all skim milk powder may not meet the U.S. non -fat dry milk standard. For more, see American Dairy Products
Institute, “Nonfat Dried Milk and Skim Milk Powder –All T he Same or Different?” ADPI Intelligence, vol. 5, issue 1,
accessed October 2020, at https://www.adpi.org/Portals/0/Academy/Intel%20and%20Commentaries/
Nonfat%20Dried%20Milk%20and%20Skim%20Milk%20Powder%20%E2%80%93%20All%20the%20same%20or%
20different.pdf.
14 For more on this see, John Dyck and Shawn Arita, “Japan’s Agri-Food Sector and the T rans-Pacific Partnership,”
Econom ic Inform ation Bulletin, Number 129, USDA, ERS, October 2014.
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Provisions Affecting U.S. Imports from Japan
The United States agreed to reduce tariffs on imports of certain perennial plants and cut flowers,
persimmons, green tea, chewing gum, certain confectionary products, and soy sauce. In a side
letter, the United States agreed to modify its tariff-rate quota (TRQ) for imports of Japanese
beef.15 The United States agreed to eliminate the 200 MT country-specific beef quota for Japan
and increase its quota for “other countries or areas” to 65,005 MT. This would enable Japan to
ship additional amounts of beef to the United States at low tariff rates under the increased “other
countries or areas” quota.16
Japan’s Other Trade Agreements and U.S. Exports
Japan’s agreement with the United States follows its recent preferential trading agreements with
other countries that have eroded U.S. shares of the Japanese markets for many agricultural
products. Japan is a party to two recent comprehensive agreements of this nature. CPTPP, which
was agreed upon by 11 countries but entered into force on December 30, 2018, for a subset of
countries, currently provides for the liberalization of agricultural trade among Australia, Canada,
Japan, Mexico, New Zealand, Singapore, and Vietnam.17 JEEPA entered into force on February 1,
2019.18 When the USJTA entered into force, these two agreements had already initiated a process
of expanding quotas and phasing out tariffs on various agricultural imports into the Japanese
market.
While the Trump Administration has stated that the USJTA should “enable American
[agricultural] producers to compete more effectively with countries that currently have
preferential tariffs in the Japanese market,”19 the USJTA is narrower in scope than either CPTPP
or JEEPA. In particular, because of the legal authority under which the United States negotiated
the USJTA, the agricultural provisions address only market access—border controls such as
tariffs and quotas—while CPTPP and JEEPA also address many other policies that may interfere
with trade in agricultural products.
Notably, the USJTA does not include a formal dispute settlement mechanism to enforce
commitments should either side take fault with the other’s implementation.20 Article 6 of the
15 UST R, “U.S.-Japan T rade Agreement T ext, Side Letter on Beef,” October 7, 2019, at https://ustr.gov/sites/default/
files/files/agreements/japan/Letter_Exchange_on_Beef.pdf. A side letter is an agreement that is not part of the primary
trade agreement, and is used to reach agreement on issues the primary agreement does not cover or that need
clarification, or to amend the primary agreement .
16 UST R, “U.S.-Japan T rade Agreement T ext, Side Letter on Beef,” October 7, 2019, at https://ustr.gov/sites/default/
files/files/agreements/japan/Letter_Exchange_on_Beef.pdf.
17 For the full text of the agreement see, New Zealand Ministry of Foreign Affairs and T rade, “ Comprehensive and
Progressive Agreement for T rans-Pacific Partnership (CP TPP),” February 21, 2018, at https://www.mfat.govt.nz/en/
trade/free-trade-agreements/free-trade-agreements-in-force/cptpp/comprehensive-and-progressive-agreement-for-trans-
pacific-partnership-text-and-resources/.
18 For the full text of the agreement see, the European Commission, “EU-Japan Economic Partnership Agreement,”
February 1, 2019, at https://ec.europa.eu/trade/policy/in-focus/eu-japan-economic-partnership-agreement/.
19 UST R, “ Agriculture‐Related Provisions of the U.S.-Japan T rade Agreement ,” Fact Sheet, September 2019, at
https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2019/september/fact -sheet -
agriculture%E2%80%90related.
20 T ypically, U.S. FT As include specific procedures for resolving disputes, which include the option to establish a
dispute settlement panel with possible punitive measures, including the withdrawal of trade concessions (i.e., a return
of tariffs to their pre-agreement levels), if the panel finds that a party failed to adhere to agreement provisions. See CRS
In Focus IF10645, Dispute Settlem ent in the WTO and U.S. Trade Agreem ents, by Ian F. Fergusson.
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“Stage One” U.S.-Japan Agreement: Agriculture
USJTA lays out a 60-day consultation process for resolving issues relating to “the operation or
interpretation” of the agreement as a means to resolve disputes relating to tariffs and quota
commitments, but lacks a binding resolution process.21 As a result, should a dispute arise, U.S.
agricultural exporters could be at a disadvantage in the Japanese market against those from the
CPTPP countries or from the EU. Lack of legal text on non-market-access provisions in the
USJTA may preclude the United States from seeking recourse if Japan were to align its non-tariff
measures for agricultural imports more closely with those of the EU or CPTPP countries,
although it could pursue this through the World Trade Organization (WTO). Among the subjects
that may be affected by these discrepancies are:
Agricultural biotechnology. The CTPPP includes provisions for cooperation and information
exchange among its 11 signatories to facilitate trade in products of agricultural biotechnology.22
The European Commission regulates agricultural biotechnology products, including imported
products, using the “precautionary principle,” prohibiting a product when there is doubt about its
safety rather than waiting for conclusive proof that it poses environmental or health risks. This
principle is also part of JEEPA.23 If Japan were to change its regulations to better align with the
EU’s, some U.S. exports now sold in Japan might no longer be permitted. Moreover, the EU has
stated that JEEPA “wil not change EU rules on hormone-treated beef or GMOs [genetical y
modified organisms]” and that “Japanese consumers also share the same concerns about GMOs
as their European counterparts.”24 As the USJTA does not include provisions on agricultural
biotechnology, it is not clear whether the agreement would protect U.S. exporters’ ability to sel
hormone-treated beef or products containing GMOs should Japan change its domestic regulations
on these subjects.
Geographical indications. The EU permits extensive use of geographical indications (GIs),
place names that identify a distinctive product originating in a certain region. These have become
a contentious international trade issue.25 For example, in the United States, “feta” is considered
the generic name for a type of cheese. However, “feta” refers to a specific variety of cheese
produced in Greece and is protected as a GI in Europe. As such, U.S cheese labeled “feta” may
not be imported for sale in the EU, where only feta produced in countries or regions that are
entitled to apply that name to cheese may be sold commercial y. An EU fact sheet on JEEPA
states that, “The EU-Japan EPA foresees full protection for more than 200 EU GIs (foodstuffs,
wines and spirits).”26 This could become an obstacle for U.S. exports to Japan of other types of
cheese such as asiago, fontina, and gorgonzola.27 Al of those names are trademarked
21 “UST R Cites Consultation Process as Primary Enforcement T ool in Japan Deal,” Inside U.S. Trade, October 15,
2019.
22 New Zealand Ministry of Foreign Affairs and T rade, CPT PP, T ext and Resources, Chapter 2, National T reatment
and Market Access for Goods, Section C, Agriculture, Article 2.27, T rade of Products of Modern Biotechnology ,”
February 21, 2018, at https://www.mfat.govt.nz/assets/T rans-Pacific-Partnership/Text/2.-National-Treatment-and-
Market -Access-for-Goods.pdf.
23 EU-Japan Economic Partnership Agreement, “An Introduction to the EU-Japan Economic Partnership Agreement,”
Fact Sheet, accessed September 2019, at https://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155718.pdf.
24 Ibid.
25 For more on this see, CRS Report R45728, Major Agricultural Trade Issues in the 116th Congress, coordinated by
Anita Regmi.
26 EU Business in Japan, “ EPA & Geographical Indications,” EU-Japan Center for Industrial Cooperation, accessed
September 2019, at https://www.eubusinessinjapan.eu/issue s/economic-partnership-agreement/epa-geographical-
indications.
27 Consortium for Food Names, “ Europe Won’t Own “Parmesan” and “Bologna” in Japan: Japan Rejects EU Attempts
T o Confiscate Many Generic Names,” December 20th, 2017; and also see letter from members of Congress to UST R,
September 20, 2019, at https://kind.house.gov/sites/kind.house.gov/files/9.20.19%20-
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“Stage One” U.S.-Japan Agreement: Agriculture
geographical indications in the EU but hitherto have not had a similar status in Japan. Certain
wines and sausages produced in the United States are also commonly sold under names that are
protected as GIs in the EU. As the USJTA does not address this issue, depending on the extent of
alignment of regulation in Japan with the EU on geographical indications, the United States may
not be able to export to Japan products sold under names that appear on the list of protected GIs
unless the exporters agree to market the products under names that are not protected in the EU.
The CPTPP includes provisions for determining a common name and a protected GI, and some
limited due-process commitments on GIs. These commitments ensure a formal process for raising
objections when new third-party agreements by one member potential y disadvantage the exports
of another. This process could constrain Japan’s adoption of EU rules on GIs.28
Sanitary and phytosanitary measures. CPTPP provides for the establishment of a committee on
sanitary and phytosanitary measures (SPS) related to trade rules and standards that address issues
of food safety, plant pests, and animal diseases.29 Lack of similar language in the USJTA could
potential y al ow U.S. exports of certain products to be excluded from Japan if the CPTPP SPS
Committee determines that certain chemicals used in the United States in food production or
processing create risks that exceed the levels specified by the committee.
Technical barriers to trade. Three annexes to CPTPP pertain to technical regulations, standards,
and the conformity assessment procedures relevant to food and agriculture. One of these
establishes parameters for labeling and certifying wine and distil ed spirits, including specifying
what information is permitted on the label and terms that may not be excluded, such as “chateau,”
“reserve,” and others.30
Another CPTPP annex provides that in adopting and applying technical regulations and standards,
CPTPP members are to limit information requirements to what is necessary to achieve legitimate
objectives and to assure commercial interests are protected by treating the confidentiality of the
information from other member states as it would for domestic products.31
The third relevant annex encourages CPTPP member countries that maintain requirements for
organic products to consider expeditiously any requests from other CPTPP members for
recognition or equivalence of standards, technical regulations, and other regulatory processes, and
to explain the reasons for the denial of any such requests.32 Moreover, it includes provisions for
“technical exchanges to support improvement and greater alignment of technical regulations,
%20UST R%20Japan%20T rade%20Agreement.pdf.
28 New Zealand Ministry of Foreign Affairs and T rade, CPT PP, T ext and Resources, Chapter 18, Intellectual Property,
Section E, Geographical Indications, February 21, 2018,” at https://www.mfat.govt.nz/assets/T rans-Pacific-Partnership/
T ext/18.-Intellectual-Property-Chapter.pdf.
29 For more information on SPS, see CRS Report R43450, Sanitary and Phytosanitary (SPS) and Related Non-Tariff
Barriers to Agricultural Trade, by Renée Johnson.
30 New Zealand Ministry of Foreign Affairs and T rade, CPT PP, T ext and Resources, Chapter 8, T echnical Barriers to
T rade, Annex 8-A Wine And Distilled Spirits,” February 21, 2018, at https://www.mfat.govt.nz/assets/T rans-Pacific-
Partnership/Text/8.-Technical-Barriers-to-Trade-Chapter.pdf.
31 New Zealand Ministry of Foreign Affairs and T rade, CPT PP, T ext and Resources, Chapter 8, T echnical Barriers to
T rade, Annex 8-F Proprietary Formulas For Prepackaged Foods and Food Additives,” February 21, 2018, at
https://www.mfat.govt.nz/assets/T rans-Pacific-Partnership/Text/8.-Technical-Barriers-to-Trade-Chapter.pdf.
32 New Zealand Ministry of Foreign Affairs and T rade, CPT PP, T ext and Resources, Chapter 8, T echnical Barriers to
T rade, Annex 8- G, Organic Products, February 21, 2018,” at https://www.mfat.govt.nz/assets/T rans-Pacific-
Partnership/Text/8.-Technical-Barriers-to-Trade-Chapter.pdf.
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standards or conformity assessment procedures that relate to the production, processing or
label ing of products as organic.”33
The USJTA does not contain similar provisions or annexes. At issue here is whether the
confidentiality of U.S. exporters wil be similarly protected under USJTA and whether
harmonization of label ing, organic regulations and standards by the 11 CPTPP members may not
align with those of the United States and thus cause a disadvantage.
Market Access: Comparison with JEEPA and CPTPP
Before USJTA, U.S. agricultural exports to Japan faced higher tariffs under WTO Most Favored
Nation (MFN) provisions than provided under the preferential tariffs and expanded tariff-rate
quotas available to members of CPTPP and JEEPA. In particular, imports from the United States
beyond the amounts covered by the in-quota rates faced, and may continue to face, high tariffs,
some exceeding 500%.34 Japan’s simple average MFN tariff on al agricultural imports was
15.5% in 2019. Almost 19% of the Japanese agricultural tariff lines had MFN tariff rates greater
than 15%.35 Many of the agricultural products subject to in-quota tariffs are subject to additional
mark-ups through the state trading system, making the products more expensive to Japanese
consumers. This may tend to suppress imports as suggested by unfil ed Japanese import quotas.
For example, in 2017 Japan imported 29% of the amount of whey for infant formula that it
al owed under the TRQ36 and the corresponding TRQ fil rates for skim-milk powder ranged
between 25% and 34%.37 Given that many TRQs go unfil ed and that over-quota tariff rates are
extremely high, relatively little trade occurs beyond the set quota levels.
According to USTR, Japan had stated a commitment to “match the tariffs” provided to CPTPP
member countries in the USJTA.38 While Japan’s tariff schedule under the USJTA attempts to
match the CPTPP schedule, the TRQ schedule fal s short of the CPTPP schedule, potential y
disadvantaging market access for some U.S. agricultural products. The USJTA does not make
provisions for a CSQ for U.S. rice, but Japan has made provisions for a CSQ for Australian rice
under CPTPP.39 CPTPP additional y includes provisions for global TRQs for barley and barley
products other than malt; butter; skim and other milk powder; cocoa products; evaporated and
condensed milk; edible fats and oils; vegetable preparations; coffee, tea, and other preparations;
33 Ibid, at no. 5.
34 World T rade Organization (WT O), “Japan and the WT O,” October 2020, at https://www.wto.org/english/thewto_e/
countries_e/japan_e.htm.
35 Ibid.
36 Whey for feed has a 0% in-quota tariff; whey for other uses have higher levels of tariff. Whey for in fant formula has
a 10% tariff. For more, see Meros Consulting, Analyzing the Im pact of the CPTPP and Japan -EU EPA on U.S. Dairy
Exports to Japan, January 2019, at http://www.usdec.org/Documents/
USDECReportonImpactofJapaneseFTAsUS%20Dairy%20ExportsJan2019.pdf .
37 Skim milk powder imported for Japan’ school lunch program is duty -free; other skim milk powder imports face a
25% tariff or a complex tariff of 21%+396 yen/kg. For more, see Meros Consulting, Analyzing the Im pact of the
CPTPP and Japan-EU EPA on U.S. Dairy Exports to Japan , January 2019, at http://www.usdec.org/Documents/
USDECReportonImpactofJapaneseFTAsUS%20Dairy%20ExportsJan2019.pdf .
38 UST R, “ Agriculture‐Related Provisions of the U.S.-Japan T rade Agreement ,” Fact Sheet, September 2019, at
https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2019/september/fact -sheet -
agriculture%E2%80%90related.
39 Under the T PP provisions, which the United States did not ratify, Japan had agreed to provide a U.S.-specific quota
for rice, which was to start at 50,000 MT in Year 1 and reach 70,000 MT in Year 13.
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link to page 12 link to page 12 “Stage One” U.S.-Japan Agreement: Agriculture
chocolate, candies, and confectionary; and sugar. No corresponding TRQs are included in the
USJTA.
While the USJTA includes market access provisions similar to those provided for most U.S.
agricultural products in existing CPTPP language, as discussed, it does not expand access for
some U.S. agricultural products, including rice and other products that the United States had
negotiated global TRQs under the TPP. Additional y, CPTPP and JEEPA have given a head start
to exporters from CPTPP member countries and the EU, which may render it difficult for some
U.S. exporters to regain their markets in Japan. Nevertheless, the agreement takes a step toward
providing market access for most U.S. agricultural exports to Japan similar to that available to
members of the CPTPP, and these U.S. agricultural exports to Japan could benefit from the
USJTA.
Japan Is an Important Market for U.S. Agriculture
Japan is an important market for U.S. farmers and ranchers, accounting for about 9% of total U.S.
agricultural exports to al destinations since 2014.40 In 2018, Japan was the third-largest export
market, after Canada and Mexico, with $12.9 bil ion in U.S. agricultural exports—out of a total of
$140 bil ion—shipped to Japan. U.S. agricultural exports to Japan have somewhat mirrored U.S.
global exports, that reached a peak value in 2014 with higher grain prices. For example, U.S.
marketing year average price for corn was $3.70 per bushel in 2014, and reached $3.36 per bushel
in 2016, 41 leading to a decline in the value of U.S. corn exports to Japan (Figure 1). U.S. corn
prices have since increased, with marketing year averages of $3.61 per bushel in 2018 and $3.60
per bushel in 2019. U.S. corn exports to Japan, nevertheless, fel in 2019 as Japan imported
greater quantities of more competitively priced Brazilian corn.42
In 2019, as CPTPP countries further eroded the Japanese market for U.S. exporters, Japan fel
behind China to become the fourth-largest export market for U.S. agricultural products,
accounting for $11.7 bil ion in total agricultural exports. Corn, beef, pork, soybeans, and wheat
make up more than 60% of total U.S. agricultural exports to Japan (Figure 1).
With CPTPP and JEEPA entering into force in early 2018, exports from the EU and the CPTPP
member countries became more competitive for Japanese importers. According to Japanese
customs data,43 while Japan’s total imports in 2018 and 2019 were about the same, around $36
bil ion, imports from the United States declined by 1% in value from $9.3 bil ion in 2018 to $9.2
bil ion in 2019. A large domestic wheat crop reduced Japan’s imports of non-durum wheat by
10% in value in 2019 compared to the import value in 2018.44 Wheat exports from the United
States declined 15% in value, from $787 mil ion in 2018 to $672 mil ion in 2019. Imports from
countries covered by JEEPA increased, although from a lower base. For example, imports from
40 U.S. Census Bureau T rade Data, accessed via USDA, FAS, October 2020, at https://apps.fas.usda.gov/gats/
default.aspx. U.S. export statistics discussed in this section use the USDA definition of agriculture. T his includes all
products in Chapters 1-24 of the U.S. Harmonized T ariff Schedule (except for fishery products in Chapters 3 and 16,
manufactured tobacco products like cigarettes and cigars in Chapter 24, and spirits in Chapter 22); essential oils
(Chapter 33); raw rubber (Chapter 40); raw animal hides and skins (Chapter 4 1); and wool and cotton (Chapters 51-52).
41 USDA, World Agricultural Supply and Demand Estimates, historical database maintained by CRS.
42 A large crop coupled with a weak currency made Brazilian corn more competitive compared to U.S. corn. For more,
see USDA, FAS, “ Japan Grain and Feed Annual,” GAIN Report Number: JA2020-0058, March 19, 2020.
43 Accessed via T rade Data Monitor, October 2020. Note that U.S. export and Japan’s import data do not match since
there is a time lag for transport of shipments leaving U.S. ports and reaching their destination in Japan. Additionally,
import data include cost of transportation and insurance that are not taken into consideration in export values.
44 USDA, FAS, “Japan Grain and Feed Annual,” GAIN Report Number: JA2020-0058, March 19, 2020.
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“Stage One” U.S.-Japan Agreement: Agriculture
Germany increasing 100% (from $42,000 to $84,000) and from Bulgaria ($16,000 to $356,000)
and Romania (none in 2018 to $8.2 mil ion in 2019) growing over 2,000%.
Figure 1. U.S. Agricultural Exports to Japan, 2014-2019
In Nominal Bil ions (B) of U.S. Dol ars
Source: U.S. Census Bureau Trade Data, accessed via U.S. Department of Agriculture (USDA), Foreign
Agricultural Service (FAS), October 2020, https://apps.fas.usda.gov/gats/default.aspx.
Notes: The chart uses USDA’s definition of agriculture, including al of the products in Chapters 1 -24 of the U.S.
Harmonized Tariff Schedule (except for fishery products in Chapters 3 and 16, manufactured tobacco products
like cigarettes and cigars in Chapter 24, and spirits in Chapter 22); essential oils (Chapter 33); raw rubber
(Chapter 40); raw animal hides and skins (Chapter 41); and wool and cotton (Chapters 51 -52).
Similarly, Japan’s imports of pork from the United States declined over 11% in value from $1.7
bil ion in 2018 to $1.5 bil ion in 2019. Pork imports from the EU and the CPTPP countries
increased. For example, Japan’s pork imports from Germany grew 22% (from $135 mil ion to
$165 mil ion), Mexico 16% ($450 mil ion to $523 mil ion), Spain 11% ($552 mil ion to $614
mil ion), Netherlands 10% ($167 mil ion to $184 mil ion), and Canada 5% (from $1.1 bil ion to
$1.2 bil ion) during the same period. Much the same is true of beef: Japan’s 2019 imports of beef
from Canada, a CPTPP signatory, increased 90% compared with 2018 (from $144 mil ion to $174
mil ion), and its beef imports from New Zealand ($131 mil ion to $159 mil ion) and Mexico ($75
mil ion to $88 mil ion), both CPTPP signatories, increased 21% and 17% respectively. Japan’s
imports of U.S. beef declined 1% from $2.04 bil ion in 2018 to $2.01 bil ion in 2019, while total
Japanese beef imports increased 4% during the same period from $4.3 bil ion to $4.5 bil ion.
Given the reduced value of shipments of key U.S. products to Japan, U.S. agricultural exports to
Japan declined 9% from a value of $12.9 bil ion in 2018 to $11.7 bil ion in 2019 according to
Census Bureau data.45 Although the USJTA, resulting in lower tariff rates on most U.S.
45 U.S. Census Bureau T rade Data, accessed via U.S. Department of Agriculture (USDA), Foreign Agricultural Service
(FAS), Global Agricultural T rade System, accessed October 2020, at https://apps.fas.usda.gov/Gats/
ExpressQuery1.aspx.
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agricultural products in the near term, should improve the outlook for U.S. agricultural exporters,
U.S. agricultural exports in 2020 have been hampered by the Coronavirus Disease 2019 (COVID-
19) pandemic. U.S. agricultural export value from January through July 2020 is 4% below the
level in 2019. USDA forecasts that U.S. exports to Japan may reach $11.6 bil ion for 2020, 1%
lower than the value of exports in 2019.46
Issues for Congress
The USJTA and the approach the Trump Administration took to negotiate it represent a significant
shift in U.S. trade policy.47 Given its constitutional authority to regulate foreign commerce,
Congress may reflect on whether this shift aligns with congressional objectives. The
Administration’s implementation of the Stage-One USJTA, without the approval of Congress, an
unprecedented move for U.S. free trade negotiations, has prompted debate among some Members
over the appropriate congressional role.48
Congress may wish to consider the impact of the agreement on the U.S. economy, including the
implications of completing (or not completing) a broader second-stage deal with Japan, and how
a staged approach affects the United States’ ability to negotiate additional agreements. The Stage-
One USJTA may have a modest overal effect on the U.S. economy, given that it covers a smal
share of bilateral trade, but it could be significant for the U.S. agricultural exporters that wil
enjoy improved access into the highly protected Japanese market.
USJTA did not improve market access for some agricultural products such as rice; barley and
barley products other than malt; butter; skim and other milk powder; cocoa products; evaporated
and condensed milk; edible fats and oils; vegetable preparations; coffee, tea, and other
preparations; chocolate, candies, and confectionary; and sugar. During the TPP negotiations,
Japan had agreed to improve access for six products that are sensitive for its agricultural sector—
beef, pork, dairy, wheat, rice, and sugar—because TPP would open access for Japanese products
into 11 markets.49 A bilateral negotiation with the United States does not provide the same
opportunity for Japan.
U.S. agricultural stakeholders50 and some Members of Congress have urged the Administration to
engage in a comprehensive “stage-two” negotiation.51 In particular, these Members want the
USJTA to offer market access to U.S. dairy products that is similar to that offered by Japan to
46 Bart Kenner and Hui Jiang, Outlook for U.S. Agricultural Trade, USDA, Economic Research Service (ERS), AES-
113, August 26, 2020.
47 For a broader discussion of issues, see CRS Report R46140, “Stage One” U.S.-Japan Trade Agreements,
coordinated by Brock R. Williams.
48 “Ways & Means Members Press UST R for Answers on U.S.-Japan T rade Agreement in Letter to Lighthizer,” Inside
U.S. Trade, November 27, 2019.
49 T estimony of Darci Vetter, House Ways and Means Subcommittee on T rade, U.S.-Japan Trade Agreements hearing,
116th Cong., 2nd sess., November 20, 2019, at https://waysandmeans.house.gov/sites/
democrats.waysandmeans.house.gov/files/documents/U.S.-
Japan%20T rade%20Agreements%20Hearing%20Transcript.pdf .
50 Comments from the Agriculture Policy Advisory Committee in the U.S. T rade Advisory Report, “Advisory
Committees Reports Pursuant T o T he Bipartisan Congressional T rade Priorities and Accountability Act of 2015 and
the T rade Act of 1974 T rade,” October 4, 2019.
51 Letter to U.S. T rade Representative Lighthizer from Representatives Ron Kind, Suzan DelBene, Gwen Moore, Mark
Pocan, and Peter Welch, September 20, 2019, at https://kind.house.gov/sites/kind.house.gov/files/9.20.19%20-
%20UST R%20Japan%20T rade%20Agreement.pdf.
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CPTPP countries. They also emphasize the need to negotiate access for food products sold under
accepted common names and prevent these from being protected as GIs.52
A staged-partial bilateral agreement may al ow the United States to quickly reach an agreement to
improve access for selected goods so as to provide the same level of access to many U.S.
agricultural products that were disadvantaged by Japan’s agreements with the EU and with
CPTPP member countries. However, the full benefit of such an agreement may be contingent on
reaching a comprehensive agreement in follow-up negotiations. Japan may not view a second
stage bilateral agreement with the United States as being equivalent to an agreement with 11
trading partners, as under the CPTPP, and may be less inclined to provide access to U.S. rice,
sugar, and the remaining dairy products in subsequent negotiations.53
Congress may also wish to weigh the overal economic and geopolitical benefits to the United
States from a staged approach to a bilateral negotiation versus one involving a comprehensive
agreement. Some Members of Congress have raised concerns that the United States may be
withdrawing from its leadership role in Asia while China is actively engaged in negotiating the
Regional Comprehensive Economic Partnership.54 A bilateral agreement, such as the agreement
with Japan, may not al ow the United States to shape broader al iances in the Asia-Pacific region
or to play a significant role in shaping global trade rules and standards governing non-tariff
measures such as those relevant for GIs, agricultural biotechnology, or trade in organic products.
The limited scope of the USJTA commitments has led several analysts and some Members of
Congress to question the extent to which the agreement adheres to Article XXIV of the General
Agreement on Tariffs and Trade under the WTO.55 This provision requires regional trade
agreements outside the WTO to eliminate duties and other restrictive regulations of commerce on
“substantial y al trade” between the parties.56 The EU, Israel, China, Canada, and New Zealand
have also questioned Japan whether its Stage-One agreement with the United States conforms to
Japan’s obligations under its WTO commitments.57
Congress may wish to consider whether the Stage-One agreement is consistent with U.S.
obligations under the WTO. Congress may examine whether the limited scope of the agreement
sets precedents for other countries to negotiate other partial trade agreements that liberalize trade
52 Fifty-one Members of Congress Letter to U.S. T rade Representative Lighthizer and USDA Secretary Perdue, July 8,
2020, at https://kind.house.gov/media-center/press-releases/reps-kind-smucker-harder-and-marshall-lead-bipartisan-
letter-urging.
53 For a discussion of this, see testimony of Darci Vetter, House Ways and Means Subcommittee on T rade, U.S.-Japan
Trade Agreem ents hearing, 116th Cong., 2nd sess., November 20, 2019, at https://waysandmeans.house.gov/sites/
democrats.waysandmeans.house.gov/files/documents/U.S.-
Japan%20T rade%20Agreements%20Hearing%20Transcript.pdf .
54 Questions by Representative T erri A. Sewell to Ambassador Darci Vetter at the House Ways and Means
Subcommittee on T rade, U.S.-Japan Trade Agreem ents hearing, 116th Cong., 2nd sess., November 20, 2019, at
https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/U.S.-
Japan%20T rade%20Agreements%20Hearing%20Transcript.pdf ; and Fox Business News, “ Mornings with Maria
Interview with Sen. Marsha Blackburn,” August 3, 2020. T he Regional Comprehensive Economic Partnership is a
proposed free trade agreement in the Asia-Pacific region among Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, T hailand, and Vietnam, Australia, China, Japan, New Zealand, and South Korea.
55 “Analysts Question WT O Compliance of U.S.-Japan Deal,” Inside U.S. Trade, September 17, 2019.
56 T he WT O does not define “substantially all trade,” but member countries have generally interpreted it to mean 90%
of trade. For the provision text, see https://www.wto.org/english/docs_e/legal_e/gatt47_02_e.htm#articleXXIV. T he
General Agreement on T rade in Services (GAT S, Article V) has similar requirements for other trade agreements to
include “substantial sector coverage.”
57 Isabelle Isco, “Japan Defends U.S. T rade Deal Amid Scrutiny At T he WT O,” Inside U.S. Trade, October 15, 2020.
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on a limited set of products or sectors that could potential y discriminate against the United
States, as wel as potential y undermine respect and adherence to the letter and spirit of the WTO.
Author Information
Anita Regmi
Specialist in Agricultural Policy
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Congressional Research Service
R46576 · VERSION 1 · NEW
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