North America
WASHINGTON, D.C., U.S. — Fearing the loss of the valuable Japanese market for U.S. wheat farmers, U.S. Wheat Associates (USW), the National Association of Wheat Growers (NAWG) and 33 state wheat organizations recently expressed hope in a letter to U.S. Trade Representative Robert Lighthizer that the Trump administration will prioritize accession to the Trans-Pacific Partnership.

The TPP is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam signed Feb. 4, 2016, which has not entered into force. The United States had been a part of the agreement but withdrew in January 2017. Recently, President Trump signaled that he may be open to rejoining the TPP if better terms for the United States can be negotiated.

“Once TPP is ratified, U.S. wheat exports to Japan will be at serious risk,” the letter stated. “TPP will reduce the effective tariffs that Japanese flour millers pay for imported Australian and Canadian wheat over nine years from about $150 to $85 per tonne.

“Effective tariffs on imported U.S. wheat would remain at about $150 per tonne. Loss in market share and its negative effect on farmgate prices are likely to come much sooner, as Japanese millers reformulate their product mix to avoid the need to purchase artificially expensive U.S. wheat. Lost market share is incredibly difficult to regain.”

The wheat industry organizations noted that Japan has, on average, imported more U.S. wheat than any other country for many years. U.S. wheat market share is typically more than 50% of the 6 million tonnes of wheat Japan imports annually. However, sources within the Japanese milling industry estimate that could quickly fall to less than 25% under TPP-11 rules.

At the average price Japan has been paying for U.S. wheat the past five years, that would represent an annual loss of almost $500 million for farmers, rail and barge operators and grain handlers.

“Unfortunately, the agreement among the TPP members will have a devastating impact in rural communities across the wheat belts of the Great Plains and the Northwest, though it will hurt the income of every American farmer growing wheat,” the letter said. “The president has promised to negotiate great new deals. American agriculture now counts on that promise and American wheat farmers — facing a calamity they would be hard pressed to overcome — now depend on it.”

In January at the World Economic Forum in Davos, Switzerland, Trump told CNBC that he would reconsider the TPP if the United States could strike a “substantially better” agreement.

“The deal was terrible; the way it was structured was terrible,” Trump said. “If we did a substantially better deal, I would be open to TPP.”

But it may be too late for the United States to enter renegotiations the remaining 11 countries are moving ahead with a revised deal that is likely to be signed in the coming weeks.

To view the letter, click here.