Lack of a U.S. trade agreement with Japan is costing Montana farmers millions in lost wheat sales. Tuesday U.S. Sen. Steve Daines implored the Trump administration to do something about it.
Daines told U.S. Trade Representative Robert Lighthizer that Montana’s malt barley farmers have been harmed by America’s exit from the Trans Pacific Partnership. Trump dumped the 10-nation deal after taking office in 2017. The other nations involved in the agreement pressed on and are now benefiting from TPP’s better trade terms.
“TPP provided a great opportunity for us to see significant tariff reductions, as you know, moving beef tariffs in Japan from 38 percent to 9 percent, to see a 45 percent tariff reduction on wheat in Japan, over the course of nine years,” Daines said Tuesday. “These are huge markets, and just yesterday I was meeting with some of my barley producers. They’ve now lost contracts. They’ve lost malt barley contracts with Japanese clients, and they’re very concerned.
“My plea is to move this to getting results now because the results we’re seeing at the moment are losing market share. And we lose that share to foreign competitors. It’s tough to get that back.”
The questions came as Lighthizer appeared before the Senate Finance Committee to discuss trade. Much of the conversation centered on China, but noting the economic losses piling up for Montana wheat and barley farmers, Daines pulled the conversation toward Japan.
Lighthizer recognized something needed to be done. Trump campaigned on exiting multilateral free trade agreements and replacing them with one-on-one contracts between the United States and individual nations. No agreement has been reached with Japan, which is the main buyer of Montana wheat. Meanwhile, the TPP deal has given wheat competitors like Canada and Australia preferential terms with Japan.
“It will take a while to get an entire (free trade agreement), but my own view has been that we have to take care of the agriculture part of it and some other stuff so it’s balanced at an earlier stage,” Lighthizer said. “Some senators probably won’t like that. Some will like it, but I think because of the market situation in Japan we have to move in that direction.”
Lighthizer said things were only going to get worse for farmers as TPP advanced further reducing tariffs over the next decade.
In the populist wave of the 2016 elections, both Trump and Democrat Hillary Clinton opposed TPP. U.S. Sen. Jon Tester, Montana’s farmer lawmaker did as well, saying he was for “fair trade, not free trade.” Unions called TPP a job killer while environmentalists and human rights groups argued the agreement allowed industrial conditions out of sync with American values.
Daines voted to give TPP an up or down vote in the Senate, meaning lawmakers would either pass the agreement as negotiated by the Barack Obama administration or reject it without amendments. Obama had argued that congressional amendments threatened to drive the 10 other nations away from the agreement. By November 2016, Senate Majority Leader Mitch McConnell had declared the TPP dead on arrival in Congress.
Losing the TPP was a major disappointment for the Montana Grain Growers Association. The agreement had been in the works since 2002 and was supposed to be a counter balance to the influence of China along the Pacific Rim. Trade terms were to get better in Japan and new markets were expected to open.
“Japan is a major buyer of U.S., and in particular Montana, high-protein wheat," said Lyle Benjamin, MGGA president. "Because the USA is not a part of TPP, the difference in tariff rates selling into the Japanese market make Montana's grains increasingly less competitive with quality wheat growing countries like Australia and Canada, who are TPP members. Montana farmers are already feeling the pressure from this, and the pressure will only increase as TPP scales into effect over the next few years. Montana Wheat and Barley Committee estimates that our farmers have lost $150 million in sales in the first year after swerving away from TPP membership.”
Japan buys more than 70 percent of Montana’s wheat. The state risks losing the entire market by the time TPP is in full force, Benjamin said.