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US at Disadvantage in Japan Trade Deal
Monday, April 21, 2014 2:37PM CDT

By Richard Smith
DTN Tokyo Correspondent

TOKYO (DTN) -- The trade deal agreed upon April 7 between Japanese Prime Minister Shinzo Abe and Australian Prime Minister Tony Abbott will put U.S. and other beef exporters to Japan at a disadvantage, unless Tokyo can be persuaded to do away with beef tariffs under the Trans-Pacific Partnership free trade pact.

The trade deal, the first one Japan has agreed upon with a farm-exporting nation, also sets a precedent where Japan can retain partial barriers to farming products it considers sensitive to its own agriculture.

Beef coming into Japan gets hit by a 38.5% tariff. Under the agreement, Tokyo will gradually lower the tariff on Australian chilled beef over 15 years to 23.5%. And it will take 18 years for the tariff to go down to 19.5%.

Australia exports to Japan mostly agricultural products and energy resources, taking in Japanese automobiles and other industrial products. Under the deal, Canberra will scrap its tariffs on Japanese automobiles.

The bilateral agreement comes at a time when Australia, Japan and seven other countries are negotiating to join the Trans-Pacific Partnership free trade pact.

The 2005 pact between Brunei, Chile, New Zealand and Singapore called for reduction of all tariffs by 90% between member countries by Jan. 1, 2006, and reduction to zero by 2015.

In the past few years, Australia, Canada, Chile, Japan, Malaysia, Mexico, Peru, the U.S. and Vietnam have been negotiating to join the trade pact. But Japan has said it intends to keep tariffs on seven sensitive farm products -- rice, wheat and barley, beef and pork, dairy products and sugar -- under a TPP.

U.S. Meat Export Federation International Program Assistant Vice-President Greg Hanes said his organization cannot yet comment on how the Australia-Japan trade deal will affect U.S. beef exports to Japan. "We are still assessing the situation, looking at the TPP (negotiations) to see how the results will impact" on U.S. beef exports here, Hanes said.

For their part, New Zealand meat industry leaders have expressed strong disapproval of the trade deal. New Zealand Meat Industry Association Chairman Bill Falconer said in a press release that without a comprehensive, high-quality TPP, his country's fellow beef exporters are now going to have a competitive disadvantage in their fifth-largest beef market, and largest market for chilled beef.

"We've always placed a lot of importance on a successful and high-quality TPP deal that removes all tariffs on our exports," Falconer said.

In the same press release, Beef + Lamb New Zealand Chairman James Parsons said the Australia-Japan deal was much less ambitious than a typical New Zealand FTA and was "in a completely different league" from the ongoing TPP negotiations.

"A high-quality deal means complete tariff elimination on all products of trade interest -- that's basically what New Zealand has achieved in its FTAs," Parsons said.

"It's disappointing to see Australia and Japan not get up to that standard, particularly while we're all in the middle of trying to finish a very high-quality TPP agreement," he said.

Richard Smith can be reached at richard.smith@dtn.com


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