SALEM — The first phase of the U.S.-Japan Trade Agreement announced on September 25 will reduce tariffs on many agricultural products. Japan is the largest international market for Oregon’s food and ag products and this agreement will have a positive impact on Oregon’s largest exports to Japan. The trade agreement is a win for many Oregon products including, beef, wheat, frozen potatoes, blueberries, cranberries, cherries, pork, cheese, frozen blackberries, prunes, sweet corn, and wine.
In essence, this trade agreement levels the playing field for many U.S. food and agricultural products. Recently, U.S. products have been at a disadvantage in the Japanese market, where signees of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and European Union trade agreements have benefited from lower and lower tariff rates. For many products, this trade agreement brings the tariffs on U.S. food and agricultural products into alignment with the parties to the other trade agreements. The trade agreement also increases the quota for wheat, which is the single largest agricultural export from Oregon to Japan.
Oregon’s farmers, ranchers, winemakers, and food processors have felt the stress of having their markets tighten due to the changing tariff situation in key markets including China and Japan. Since January 2018, U.S. farmers and ranchers have been riding a roller coaster of uncertainty when it comes to trade with China—trade talks, failed trade talks, escalating tariffs, and retaliatory tariffs. While the U.S. has imposed tariffs on more than $250 billion in Chinese imports, China’s retaliation tariffs are targeting U.S. agricultural commodities. In Oregon, one of the most trade-dependent states in the nation, the ongoing tensions are impacting agricultural sectors like fresh cherries, potatoes, and beef.
In 2018, industry experts tell us northwest cherry growers lost $86 million in sales to China due to non-tariff barriers. While China did not add a specific tariff to cherries, trade tensions meant additional inspections were suddenly required. That translated into highly perishable commodities such as cherries, sitting on a shipping port for 7 to 10 days, downgrading the quality and price. While demand for cherries in China has grown 83 percent from 2017 to 2018, U.S. sales have fallen from 27,000 tons to 14,000 tons, with Chile and Canada making up the difference. Once we lose our place in the market, it is difficult and costly to earn it back.
The impact of trade friction and continued escalation has had a chilling effect on Oregon’s ability to sell goods to China. Northwest potato growers report a $20 million loss in 2018 due to tariffs. Growers in other-potato producing regions, such as Europe and Turkey, are taking advantage of the U.S. export slowdown and ramping up their production. Exporting Oregon beef into China is stalled. In May of 2018, I led a trade mission to China with an emphasis on beef. China had just opened their borders to U.S. beef after a 13-year lock out. We had high hopes for Oregon beef in China and the country remains an exciting market with a growing middle class expected to reach 160 million in the next decade. Trade tensions, however, have stopped any progress.
There is no doubt that the trade dispute is reshaping international markets in ways that will hurt U.S. and Oregon farmers for years to come if a resolution is not found quickly. China is Oregon’s fourth largest agricultural export market, shipping more than $270 million in product in 2018. At ODA, we are focused on the long term. That means despite uncertainty in federal trade policy, ODA will continue to explore new trade relationships, nurture existing relationships with trading partners, and host inbound and outbound trade missions with the goal of keeping and growing Oregon’s place in the agricultural global marketplace.