US-Japan trade agreement could benefit ethanol

By Erin Voegele | September 26, 2019

A new trade agreement was reached Sept. 25 between the U.S. and Japan, our nation’s third largest agricultural export market. According to the Office of the U.S. Trade Representative, the agreement includes a staged tariff elimination for ethanol.  

A statement released by the White House indicates Japan will open its markets to approximately $7 billion in American agricultural exports and more under a market asset agreement.  That deal will eliminate or significantly lower tariffs for American beef, pork, poultry, wheat, cheese, wine, certain nuts and berries, cherries, ethanol and other products. The White House said the U.S. and Japan will engage in further negotiations during the next several months in the interest of achieving a final, comprehensive trade deal.

Ryan LeGrand, president and CEO of the U.S. Grains Council, released a statement noting the agreement with Japan “will solidify our longstanding partnership for the future and create a platform for growth into new sales and new sectors, including the potential for sales of U.S. ethanol.”

“The details revealed today about the trade agreement between the U.S. and Japan show that this pact would bring commodities the U.S. Grains Council represents largely back in line with the Trans-Pacific Partnership Agreement (TPP) and put these commodities on equal footing with other current Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) countries,” LeGrand continued. “This access is welcomed by our members in the U.S. grains production and exports sectors, and we look forward to rapid implementation of the new agreement.

“While this is the first in several rounds of agreements yet to come and we hope to see continued improvement in the ethanol sector, this is a good first step,” LeGrand said. “We encourage the administration to pursue broader access for all of agriculture and we move forward with our partner, Japan.”

To date, Japan has not been a significant market for U.S. ethanol. That, however, could soon change. The Japanese government announced a new biofuels policy in April 2018 to allow imports of ETBE made from U.S. corn ethanol. The first shipment of ETBE made with U.S. ethanol arrived in the country in July 2019.