Struggling U.S. agriculture exports to Japan, which have cost Montana farmers millions in sales since the start of 2019, are a few months away from being resolved, U.S. Trade Representative Robert Lighthizer testified Tuesday.
Lighthizer, taking questions from Sen. Steve Daines, R-Mont., before the Senate Finance Committee, said his office was working with Japan to smooth out tariff troubles brought about by the United States’ 2017 exit from the multinational Trans-Pacific Partnership. Nations who stuck with the U.S.-initiated TPP are seeing tariff reductions in Japan that the United States isn’t.
Montana wheat producers expect their 2019 trade losses in Japan to hit $150 million. More than 70 percent of Montana wheat is exported, most of it to Japan. But tariff reductions offered to Canada and Australia have put Montana wheat sales at a disadvantage.
“I think we are making headway and we’re in a situation where we if we don’t make headway quickly, people will lose market share and never get those customers back,” Lighthizer said at the livestreamed hearing. “It’s a serious thing that Japanese are fully engaged. They understand what needs to be done. We’ve been quite clear about it and my hope is in the next few months we’ll have an agreement on this.”
Lighthizer never mentioned grain specifically, sticking instead to beef tariffs, which Japan recently agreed to lower from 38.5% to 25.8%.
“We have about three cows per person in Montana so, that’s music to my ears,” Daines said. “We’d like to ship more of them over to Japan.”
The Japan Times reported June 14, that the nation’s Economic Revitalization Minister, Toshimitsu Motegi, has indicated Japan and the United States will conclude bilateral trade talks later this summer after elections for Japan’s House of Councilors. It was the first time Motegi had put a completion of U.S. trade talks on a timeline. In exchange for fast tracking tariff reductions on U.S. agricultural products, Japan is asking the United States to remove tariffs on Japanese automobiles and other manufacturing sector products.
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“We have had a series of negotiations, including at the staff level and at my level last week. We’re going to meet again during the course of the G20 on the side of the G20. I’ll talk to you privately about that,” Lighthizer told Daines.
President Donald Trump and Prime Minister Shinzo Abe are expected to meet on the sidelines of the G20, which takes place in Osaka.
Daines also pressed Lighthizer on keeping Powder River Basin coal flowing to Japan, the challenges being coal port access and market price. Montana and Wyoming thermal coal ships from Westshore Terminal in British Columbia. Attempts to build a coal port near Longview, Washington, have failed over permitting disagreements with Washington State.
The region's coal economy is struggling, having just this year seen two major coal companies in bankruptcy and multiple coal-fired generating units targeted for closure, including four in Wyoming, three in Montana and two in North Dakota.
Japan’s concerns about shipping Australian and Indonesian coal through the South China Sea, where it has territorial disputes with China, make U.S. coal shipped across the Pacific attractive, Daines said.
“I can tell you the Japanese have voiced their concerns directly to me about the fact that coal is coming through the South China Sea. The concerns are about the militarization of the South China Sea,” Daines said. “We have very clear shipping lanes from our West Coast over to Japan. They want more Montana coal. They want Powder River Basin coal. That’s very good for our state. That’s very good for jobs. It’s very good for Montana’s Crow Tribe, as well as overall energy security.”
The primary topic for Tuesday's hearing was the U.S., Mexico, Canada Trade agreement, or USMCA. The trade agreement, nicknamed NAFTA 2.0, is a lesser concern for Montana agriculture.