Japan ratifies CPTPP, wheat organizations call for action

Garth Meyer, Gazette Reporter | Jul 12, 20180

count

Haying season underway off of Pullman-Wawawai Road July 1.

Japan on July 6, became the second country to ratify the 11-nation CPTPP agreement, leading U.S. Wheat Associates and the National Association of Wheatgrowers to call for the U.S. to join the pact or start bilateral negotiations with Japan - to allay the impact on America's No. two wheat export market.

The CPTPP (Comprehensive and Progressive Trans-Pacific Partnership) came out of the original Trans-Pacific Partnership which was negotiated by the George W. Bush and Barack Obama administrations. The controversial pact, for which support waned in the U.S. at the end of the Obama years, was designed as a counter to China's growing economic influence.

The Trump administration pulled the U.S. out of the TPP soon after he became president. The remaining countries then reconvened and agreed to the CPTPP.

Once implemented, the deal incrementally discounts the effective import tariffs that Japanese flour millers pay for imported Australian and Canadian milling wheat from about $150 to about $85 per metric ton (MT). Imported U.S. wheat effective tariffs would remain at about $150 per MT.

With Japan and Mexico ratifying the CPTPP so far, it could take effect in early 2019, once six of the 11 countries that signed the agreement have ratified it. Canada and Australia, which are major competitors to the United States in the Japanese wheat market, are also parties to the agreement.

Estimates by the Japanese milling industry indicate that, once the CPTPP is in effect, they will start looking at alternatives to U.S. wheat and cut average total imports of western white, dark northern spring and hard red winter wheat by more than half ― from about 3.1 million metric tons per year to 1.35 million metric tons per year or less.

U.S. Wheat Associates estimates that if the new tariff schedule is fully implemented, the U.S. grain trade could drop by $500 million, with most of that transferring to Australia and Canadian farmers.

U.S. Wheat Associates is a marketing organization funded by 17 state wheat commissions and the USDA's Foreign Agricultural Service. The National Association of Wheatgrowers represents farmers in Washington, D.C., working with 20 state wheat grower organizations.