Japan’s trade deal, Brexit on the brain and more trade updates
On Sept. 25, the U.S. and Japan signed a “mini” trade deal that will provide increased access for U.S. agricultural products. This is great news for Oregon farmers and food producers, as Japan is the top market for soft white wheat grown in the Pacific Northwest, with Oregon exporting 90% of its crop to the country.The Pacific Northwest International Trade Association (PNITA) supports economic opportunities for Oregon companies, workers, and farmers through education, advocacy, and promotion on international trade. Here is what we are tracking:
Japan's Trade Deal
On Sept. 25, the U.S. and Japan signed a “mini” trade deal that will provide increased access for U.S. agricultural products. This is great news for Oregon farmers and food producers, as Japan is the top market for soft white wheat grown in the Pacific Northwest, with Oregon exporting 90% of its crop to the country.
Though this deal is not as beneficial to the U.S. as the Trans-Pacific Partnership (TPP) would have been, it does help level the playing field on agricultural ground lost as a result of the Administration withdrawing from the deal. The remaining 11 partner countries of the TPP, including Japan, Canada, Mexico, Vietnam, New Zealand and Australia, went ahead without the U.S. to establish a free trade agreement, called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP puts American farmers at a great disadvantage in each one of those countries because absence from the deal means that U.S. products will have tariffs while our competitor’s products will not.
This limited deal, which goes into effect in January, expands access for Oregon products into the Japan, including cheese, beef, wine and others. A broader, longer lasting deal will continue to be negotiated in the spring. One sticking point for Japan? Any long lasting deal must include assurances that the U.S. will not impose the 25% tariffs on Japanese auto imports, which the president has repeatedly threatened. This limited deal does not include such assurances.
Brexit on the Brain
With the Oct. 31 deadline looming for a withdrawal from the European Union, the U.K. consulate offices throughout the country have been preparing by actively engaging with key states in advance of negotiating a bilateral trade deal with the US. Last week, General Consul Whittaker of San Francisco and the Royal Navy Red Arrows were in Oregon, partially to make it known that the U.K. is a ready partner in trade with Oregon.
The U.K. is Oregon’s ninth largest export partner and thousands of jobs in our state are supported by this activity. Our top five exports to the U.K. are computer equipment, communications equipment, basic chemicals, aerospace parts, and pharmaceuticals. The U.K. is also Oregon’s second largest source of foreign direct investment, second only to Japan.
USMCA and China
Not much has changed on the China front since our last update, except to say things continue to get increasingly worse for companies and farmers being impacted by the tariff war. Manufacturing (non-electronics related) and agricultural sector exports have taken a sharp downturn, 7% in the first half of the year alone. According to reports, the number of manufacturing hours being worked in Oregon has fallen to a pace more than double the national rate. While the tariff war is certainly hurting the U.S. economy, China is not immune. Chinese exports to the U.S. have fallen 16% and the government has announced that it will have a hard time maintaining its growth rate above 6%, which is quite low for China. The U.S. and China are both set to resume trade talks next month.
The US-Mexico-Canada Agreement (USMCA) may or may not have hit a snag, depending on who you talk to. Though the nine-person USMCA working group continues to constructively work with USTR Lighthizer to negotiate surgical improvements to the deal, the current impeachment discussions could suck all the attention away from any meaningful decision on this, or any other issue. On the other hand, some believe the impeachment hearings may put pressure on House Democrats to get a legislative achievement done to show a tangible outcome of their majority.