But agriculture experts say that for now, that boost may be lean: exports of U.S. beef to Japan are already high enough to be close to a “safeguard” level at which higher tariffs kick in.

The deal Trump and Abe signed on Wednesday will cut tariffs on U.S. agricultural products, including beef, to around levels granted to signatories of the multilateral Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which include Canada and Australia, among others.

The new agreement between Washington and Tokyo stands to benefit big U.S. beef processors such as Tyson Foods, JBS USA and Cargill. The companies are separately hoping to cash in from tighter meat supplies in Asia that have been hurt by an outbreak of African swine fever, a fatal pig disease.

Privately held Cargill, whose Canadian beef plants in Alberta and Ontario are already licensed to export to Japan, told Reuters it expects to see an increase in meat sales to Japan if the deal is finalized.

“It levels the playing field and creates additional opportunities for farmers, ranchers and companies like Cargill to serve an important international market,” Cargill said.

Tyson, JBS and National Beef Packing Co. did not immediately respond to requests for comment.

Tyson has historically been a sizable exporter to Japan and should benefit from the bilateral agreement, said Heather Jones, founder and senior equity analyst at Heather Jones Research.

“U.S. exporters have definitely been disadvantaged this year due to the U.S. not being part of the trade deal inked late last year,” she said.

‘Level playing field’

Ahead of next year’s U.S. presidential election, lower tariffs should help Trump soothe U.S. farmers, a key electoral constituency. They have been hurting from the U.S.-China trade war, even as they were still smarting from the loss of low-tariff prospects in the multilateral CPTPP that 11 nations signed in 2018.

Trump walked away from an original 12-member agreement, known as the Trans-Pacific Partnership (TPP), in 2017.

The primary goal for U.S. exporters with the bilateral deal was to protect access to the Japanese market, rather than increase sales, analysts said.

Japan is already the biggest export market for U.S. beef, with sales of $2.1 billion last year (all figures US$).

The U.S. Meat Export Federation, an industry group that represents suppliers, projects American beef sales to Japan will increase to $2.3 billion in 2020 as the trade deal levels the playing field on tariffs for suppliers.

Cassie Fish, a U.S. beef expert and former Tyson executive, said that while the deal may not significantly boost U.S. beef exports to Japan, it would prevent a decline.

“I thought it was more friendly that ‘Oh good, we’re not going to mess up our Japan trade,” she said.

Japan will permit lower import tariffs on 242,000 tons of U.S. beef in fiscal 2020, with that quota rising to 293,000 tons in fiscal 2033. Japan imported 254,529 tons of U.S. beef in the latest fiscal year through the end of March.

Tariffs on U.S. beef imports, currently 38.5 per cent, will fall in stages to nine per cent by fiscal 2033. TPP-11 members saw tariffs fall to 26.6 per cent this year after the pact took effect in December 2018 and will see further decreases to nine per cent, also by fiscal 2033.

“Since beef imports are close to the safeguard level, it’s hard to think imports from America will rise rapidly,” said Junichi Sugawara, a senior researcher at Mizuho Research Institute.

Market at risk

The North American Meat Institute, which represents U.S. beef packers, said the new agreement will make it easier for the United States to compete for business in Japan with the EU and countries in the TPP-11.

U.S. producers particularly wanted a deal that removed the tariff advantage for beef from top rival Australia.

Japan’s imports of U.S. beef grew 10.3 per cent in fiscal 2018-19 from the previous year, with their share of the market for imported beef remaining steady at about 41 per cent. Imports from Australia, America’s main competitor, rose 4.1 per cent while their market share dipped a bit, to 50 per cent from 52.1.

“If we didn’t have this deal we would see significant loss in that market,” said Troy Bockelmann, analyst for U.S. consultancy CattleFax.

A Japanese farm ministry official said beef imports are affected by several factors, including exchange rates, price and customer preferences, not just tariffs.

Trump on Wednesday praised the overall U.S.-Japan deal, which he said would open up Japanese markets to $7 billion worth of U.S. products, as a “huge victory for America’s farmers, ranchers and growers”.

“The U.S. can tell its farmers, who are in a pinch, that it won concessions from Japan,” said Takashi Imamura, a general manager at Marubeni’s research institute. “But considering the scale of America, $7 billion is not such a big achievement.”

— Reporting for Reuters by Kaori Kaneko and Linda Sieg in Tokyo and Tom Polansek in Chicago; writing by Linda Sieg. Includes files from Glacier FarmMedia Network staff.

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Trade ministers from the 12 Trans-Pacific Partnership (TPP) countries said after May meetings in Singapore the talks gained momentum and they would step up efforts over coming weeks.

A central element of U.S. President Barack Obama’s strategic shift towards Asia, the TPP would cut trade barriers and harmonize rules in a complex deal covering two-fifths of the world economy and a third of global trade.

Some officials close to the talks told Reuters they worried about a closing window of opportunity to finalize talks with U.S. mid-term elections in November.

A Mexican official, who was not authorized to speak publicly, said some were pushing to get an agreement in September at the latest.

“If we don’t make it during the summer it will be difficult for the United States to persuade voters in the middle of the mid-term election campaign, so the aim of the members, particularly Japan, the United States and Mexico, is to seek an agreement towards the end of the (northern) summer,” he said.

Still, others took a more pessimistic view. A diplomatic source from another TPP country, who is familiar with the negotiations but declined to be identified, said he did not expect ministers to meet again in July, or even August.

“Until the (U.S. mid-term) election is over, there won’t be real enthusiasm for striking a deal,” he said, adding it would need “huge political investment” in Washington to get an agreement this year.

“It is going to take considerable time to reach the final stage of negotiations. There is a lot of filibustering of issues by other countries because they are afraid if all issues are resolved, excluding those they are interested in, they will be crushed.”

Obama’s Democrats have links to labour and environmental groups who worry the TPP may cost the U.S. jobs and harm the environment. Some Democrats facing tight election races may be unwilling to support a deal that could lose them votes.

The White House hoped to complete TPP last year but talks stalled over Japanese tariffs on agricultural imports. Tokyo wants to protect rice, wheat, dairy, sugar and beef and pork products, while Washington seeks to shield U.S. carmakers from increased Japanese competition.

Countries hope to wrap up talks this year. Japanese Economics Minister Akira Amari has said talks are in their final phase. U.S. Trade Representative Michael Froman has said the substance will drive the timetable.

Those attending the Singapore talks said they noted a change in attitude from Japan after an earlier summit between Obama and Japanese Prime Minister Shinzo Abe.

“Japan is starting to sit down and talk with members like Mexico… Peru and Chile, whereas before they had been a bit evasive,” the Mexican official said.

Australian Trade Minister Andrew Robb said countries made real progress on what each would offer on market access. “My sense is that we are months, not years, away,” he said in written response to questions.

A New Zealand industry source briefed on the talks said it was unlikely that officials would reach anything other than a “cosmetic” agreement this year, with details to be worked out next year.

New Zealand has its own elections in September and the government will effectively be in hiatus from late June.

An individual familiar with the U.S. position said talks were not in the final phase yet and outstanding issues included the environment text, numerous intellectual property questions, rules on labour and the operation of state-owned enterprises.

— Ana Isabel Martinez reported for Reuters from Mexico City, Linda Sieg reported from Tokyo and Krista Hughes from Washington. Additional reporting for Reuters by Gyles Beckford in Wellington and Matt Siegel in Sydney.

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