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U.S. beef exporters disadvantaged by Aussie-Japan free trade pact

Bloomberg

U.S. beef shipments to Japan may drop after the largest Asian buyer inked a deal with Australia to begin reducing import tariffs as early as next year, the agriculture ministry said.

Japan agreed to gradually lower tariffs on imports of frozen beef from Australia to 19.5 percent and cut duties on chilled beef to 23.5 percent in a bilateral accord reached Monday. The levies are now 38.5 percent, and the reductions will take place over 18 years and 15 years, respectively.

The deal will give Australia an advantage over the U.S. in a market worth ¥267 billion last year, according to Marubeni Research Institute in Tokyo. American beef exporters could lose as much as 80 percent of their sales in Japan unless the U.S. government is able to secure a similar deal, the ministry said.

“Japan and Australia reached a general agreement in a satisfactory way for both sides,” economy minister Akira Amari said. “I hope TPP negotiations with the U.S. will accelerate.”

The three countries are also among 12 nations negotiating the Trans-Pacific Partnership amid wrangling between the U.S. and Japan over farm and auto tariffs.

The bilateral agreement is expected to take effect early in 2015 as Prime Minister Shinzo Abe plans to visit Australia later this year to sign the deal, said Kenji Morita, director at the ministry’s meat and egg division. President Barack Obama will visit Japan this month and discuss plans for the TPP with Abe.

Japan imported 535,495 tons of beef last year, of which 286,946 tons, or 54 percent, was from Australia, 186,164 tons were from the U.S., and 29,459 tons were from New Zealand, according to data from the ministry.

Frozen beef represented 58 percent of the meat from Australia and was used mainly for processed food, including hamburgers.

Chilled beef is sold at supermarkets and served at restaurants in thin strips. Lower tariffs would help reduce costs for food processors and retailers, including Nippon Meat Packers Inc., Aeon Co. and Zensho Holdings Co.

  • 151E

    “The reductions will take place over 18 years and 15 years, respectively.” Wow, ludicrous! Had to google this to make sure it wasn’t a misprint. And how exactly is this a free trade pact (vs an ordinary trade pact) if tariffs still remain?