Audio: ‘TPP-11’ Agreement Heightens Concerns about Market Access in Japan for U.S. Beef, Pork
The 11 remaining members of the Trans-Pacific Partnership (TPP)* recently announced plans to move forward with a modified trade agreement. U.S. Meat Export Federation (USMEF) Economist Erin Borror explains that if the agreement, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), is implemented without the United States as a participant, it will create significant tariff rate advantages for competitors of U.S. beef and pork.
The U.S. has free trade agreements in place with several CPTPP countries, but the major exceptions are Japan and Vietnam. Borror notes that Australia, Mexico and Chile already have economic partnership agreements with Japan, but the CPTPP would provide even more tariff relief for beef imported from these countries, and would lower tariff rates on Japan’s imports of Canadian and New Zealand beef. Japan’s beef import safeguards, which are administered on a quarterly basis for countries that do not have trade agreements with Japan, would shift to annual safeguards for beef imports from CPTPP countries, making them less likely to be triggered. Under Japan’s frozen beef safeguard, the tariff rate on U.S., Canadian and New Zealand beef was recently increased from 38.5 percent to 50 percent, where it will remain through March 31, 2018.
CPTPP would provide tariff relief for Canadian pork – the United States’ largest competitor in Japan’s imported chilled pork market. Pork from Mexico and Chile would also make market access gains beyond their current economic partnership agreements with Japan. Perhaps the largest breakthrough in the CPTPP’s pork provisions is Japan’s gradual elimination of tariffs on processed pork products – something Japan has never previously included in a trade agreement. Borror adds that while the European Union is not included in CPTPP, the EU and Japan are expected to finalize an economic partnership agreement in the next few months, which includes similar terms. This would leave the United States as the only major pork supplier to Japan without a trade agreement in place.
*The full list of CPTPP participants is: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Joe Schuele: The 11 remaining members of the Trans Pacific Partnership have announced plans to move forward with the agreement. In this U.S. Meat Export Federation report, USMEF Economist Erin Borror explains that the biggest concern for U.S. beef and pork is on market access to Japan.
Erin Borror: Let’s talk about beef first. Japan is obviously our largest export market and we pay higher tariffs in Japan than any other significant market. So we have the most to gain and we have the most at stake, as we Australia, Mexico and Chile already benefitting from lower tariffs in their respective partnership agreements with Japan and they will see tariffs further reduced under the modified TPP agreement. Today, Australia’s tariff is 27.2 percent on frozen beef, for chilled it’s just under 30 percent. U.S. beef is paying 38.5 percent on chilled and today 50 percent on frozen because of the safeguard. With TPP, the reductions are front-loaded, so immediately tariffs will be reduced to at least what Australia is paying and phased down to 9 percent over 15 years. And the safeguard mechanism, which Japan maintains on a quarterly basis would be switched to an annual safeguard, which has a very low likelihood of being triggered.
Joe Schuele: Competitors of U.S. pork gained not only through TPP but also through the upcoming agreement between Japan and the European Union.
Erin Borror: For Japan on the pork side, tariffs are eliminated on processed pork products. That market has never been opened in any existing bilateral, so it’s a huge breakthrough. Canada is in a sense is our biggest competitor in that we supply similar products into the Japanese market. They are by far the biggest competitor on chilled pork. Mexico and Chile already have reduced tariffs in their respective agreements, but further gains for them. And importantly, similar terms are included in Europe’s bilateral with Japan. And so once again U.S. pork will be the only significant supplier to Japan that will not be seeing tariff reductions.
Joe Schuele: For more information, please visit USMEF.org. For the U.S. Meat Export Federation, I’m Joe Schuele.