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U.S., Japan Begin Trade Negotiations

Country is a strong purchaser of sorghum, barley and DDGS, and second largest buyer of U.S. corn

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Japanese Prime Minister Shinzo Abe and President Trump agreed to start trade negotiations on Wednesday in an move that will likely shield Tokyo from Trump's proposed 25% duty on imports of Japanese vehicles and automotive parts, reports CNBC.

But entering talks was considered a major concession for Abe, who will now have to carefully manage U.S. demands to open up his country's sensitive agriculture sector.

Before Trump's threat of auto tariffs, Tokyo had previously made clear that it preferred the multilateral framework of the Trans-Pacific Partnership, which Trump exited in 2017, over a two-way arrangement.

American Farm Bureau Federation President Zippy Duvall says the joint statement between Trump and Abe regarding trade opportunities benefit both nations and is great news for America’s farmers and ranchers.

"This affirmation indicates the tide is turning for the better on agricultural trade," says Duvall. "Despite substantial tariffs that our potential to access Japan’s food and agriculture markets, in 2017 Japan was the fourth-largest market for our agricultural goods."

Positive movement with Japan related to trade and our countries' relationship as a whole is critical to the U.S. grains sector, says Tom Sleight, U.S. Grains Council (USGC) president and chief executive officer.

"Japan is one of the largest and most loyal buyers of U.S. grains, and our relationships with our Japanese customers run deep," says Sleight. "We are pleased to see this development in the work between our two countries."

USGC reports the talks are expected to come in two tranches, the first on goods and "other key areas including services, that can produce early achievements" and a second on other issues.

Japan was the second largest buyer of U.S. corn in the 2016/2017 marketing year, after Mexico, with sales of more than 12.7 million metric tons (501 million bushels). Based on data from September 2017 to July 2018, Japan will also be the second largest buyer of U.S. corn this year.

The country is also a strong purchaser of sorghum, barley and distiller's dried grains with solubes, and the Japanese government recently modified its national biofuels policy in a way that could open the door for sales of U.S. ethanol-based additives or ethanol for fuel use. USGC, which partners with local industries and governments to develop markets for grains products, has worked in Japan since 1961.

Additionally, Japan and the U.S. said this week they would work together with the European Union on issues of global importance, including at the World Trade Organization (WTO).

AFBF's Duvall says the mutual agreement will address key trade issues that chould create additional opportunities down the road and lead to wider cooperation.

"The United States is the world leader in agricultural exports and this is a key development for U.S. farm exports at a time when we desperately need this kind of good news," he says.

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