Japan, Australia achieve FTA breakthrough on farm products


Japan and Australia have reached a broad agreement on how to deal with farm products as they continue negotiations on a bilateral free-trade agreement, government sources said Sunday.

Under the deal, Japan will be allowed to retain high tariffs on imports of some of its most “sensitive” farm goods in exchange for accepting a certain amount of those products from Australia at low customs duties, the sources said.

Rice, however, will be excluded from the new two-stage tariff system, they said.

The two countries are now hoping to conclude the FTA talks this summer if disagreements on reducing automotive tariffs can be worked out.

Agriculture had been a major stumbling block since the talks began in 2007. Australia, a major food exporter, had urged Japan to eliminate tariffs on beef, wheat, dairy products and sugar. Japan refused.

Australia decided to compromise after Japan formally announced last month that it intended to join the talks on the Trans-Pacific Partnership agreement.

Australia, which is already a member of the U.S-led TPP, is believed to have changed its stance in order to increase farm exports to Japan as much as possible before the new multilateral trade accord takes effect, some sources said.

The agreement reached over the weekend will allow the two countries to create low-tariff quotas for Australian beef and dairy exports to Japan. Once the quotas are exceeded, the products will be subject to Japan’s high duties.

Beef is the most valuable of Australia’s exports. The Japanese tariff for beef is 38.5 percent.

Australia, on the other hand, has managed to retain a 5 percent tariff on Japanese cars for some time. About half of Japan’s exports to Australia is composed of transport equipment and related parts.

Since Japan will be able to protect some of its farm products under the FTA, it might agree to the idea of Australia lowering its auto tariff gradually instead of all at once.

  • Ultimately the problem is not about tariff equivalence because there is no comparison between low-margin farm products and high-margin manufactured goods. There is also the strategic/intellectual issue of wanting open markets, security of supply and rice subsidies as a farm of farm economy/welfare program. All not unreasonable expectations given the distorted market caused by global labour pricing disparities, which will probably take 2 generations to correct.

  • 38.5% Tariff on beef! That’s outrageous!