Rice Remains Sticking Point as Japan, US Seek to Implement Deal
(Bloomberg) -- Rice remains a point of contention for Japan and the US as they wrestle over how they understand their July trade deal, most of which has yet to take effect.
Hiroshi Moriyama, secretary general of Japan’s ruling Liberal Democratic Party, has stepped up his defense of the nation’s staple food over the weekend, according to local media reports. That followed a report by the Nikkei newspaper claiming that Japan’s chief trade negotiator Ryosei Akazawa had canceled his trip to the US last week because Washington proposed including an expansion of Tokyo’s US rice imports in an executive order.
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The Trump administration had suggested including a cut to Japanese tariffs on agricultural products as well, the Nikkei said — a move that would go against Japan’s current understanding.
The latest apparent fracas over rice reflects the difficulties of actually implementing trade deals with the US even after a deal is reached. Japan has been trying to persuade the US to follow through on an agreement to cut auto tariffs to 15% from 27.5%, and remove the stacking of universal tariffs on top of existing levies, since an agreement was reached on July 22. But neither has taken effect in the form of an executive order.
Japan has also said that the July trade deal didn’t include any reduction of its tariffs on American products, and instead focused on a $550 billion investment scheme in the US as a key pillar of the deal. While uncertainties remain over how that might be implemented, the two countries’ stance on rice also appears to be at odds.
The White House’s fact sheet on the July agreement said that Japan will immediately increase imports of US rice by 75%, with a major expansion of import quotas. But Japan’s agricultural minister has explained that gains in US rice imports will remain within Japan’s current ceiling for tariff-free foreign rice imports, and thus won’t impact domestic rice farmers.
Japan imported 346,000 metric tons of American rice last year, while its tariff-free foreign imports overall remained at 770,000 tons — roughly 11% of Japan’s domestic demand for rice. A 75% increase would raise the US quota to around 600,000 tons, theoretically decreasing Japan’s purchases from other nations including Thailand, Australia and China.
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