The Trans-Pacific Partnership trade agreement between the United States and a number of Asia-Pacific countries was designed to open new markets for American goods overseas by reducing or eliminating burdensome tariffs faced by U.S. producers. In the wake of the decision to bow out of the Trans-Pacific Partnership (TPP), we need to look for alternate ways to help U.S. producers so that America can compete and win in the global economy.
One of the first things we should do to help American producers is negotiate a bilateral trade deal with Japan, the largest and most important market for U.S. goods among the TPP countries. In 2014, Japan purchased more than $64 billion in goods from American producers, including more than $6 billion in agricultural products, more than $9 billion in transportation equipment, and more than $8 billion in computers and electronic products.
Despite this strong relationship, however, many U.S. businesses face hefty tariffs on the products they sell in Japan. U.S. trade negotiators made major progress on these trade barriers as part of TPP, and it’s critical that we take advantage of the work they did by reaching a bilateral agreement with Japan without delay.
One of the U.S. industries that would benefit significantly from a bilateral agreement with Japan is the beef industry. Japan is already the largest export market for U.S. beef, but American beef producers are at a great disadvantage compared to their Japanese counterparts. Right now, American beef faces a hefty 38.5 percent tariff in Japan. Combine that with the fact that beef prices in the U.S. are historically low, and it is clear that American beef and other agriculture producers must be included in a future agreement with Japan.
American beef producers are also at a significant disadvantage in Japan when compared to overseas competitors. In 2014, Australia concluded a trade agreement with Japan that currently gives its beef an 11 percent tariff advantage over U.S. producers’ as of January 1, 2017.
Under the Trans-Pacific Partnership agreement, the tariff Japan imposes on U.S. beef would have been immediately reduced from 38.5 percent to 27.5 percent, and it would have continued to go down, eventually reaching 9 percent. That would have substantially increased U.S. beef’s competitiveness in the Japanese market and expanded a valuable market for U.S. beef producers.
In the wake of TPP, my home state of South Dakota would dramatically benefit from a bilateral trade agreement with Japan that provides additional market access for our ranchers. South Dakota is home to 3.9 million head of cattle and more than 15,000 beef producers. Improving U.S. beef’s competitiveness in the Japanese and other Asia-Pacific markets could lead to substantial export growth, a priority for South Dakota producers.
Our country has spent the past eight years stuck in the economic doldrums. Average economic growth for 2016 was a dismal 1.6 percent, and has averaged just under 1.5 percent during the entire Obama administration. Improving the health of our economy needs to be a priority, and one important way to do that is to open new markets for American-made goods.
A bilateral trade agreement with Japan would dramatically boost the competitiveness of American producers in a major export market. I’m happy to hear that the administration is open to such an agreement, and I stand ready to support Senate approval of any trade agreement that will expand U.S. exports, create good-paying jobs, and help our economy thrive.Senator John Thune (R-SD) is chairman of the Senate Republican Conference, chairman of the Senate Committee on Commerce, Science, and Transportation, and No.3 in Senate Republican leadership.