The Japan-Australia Economic Partnership Agreement (JAEPA) took effect Jan. 15, providing an initial round of tariff rate reductions for imports of Australian beef. Tariffs on chilled and frozen Australian beef had been 38.5 percent – the same rate that applies to U.S. beef – but have now dropped to 32.5 percent and 30.5 percent, respectively. Tariffs will be reduced again on April 1 when the 2015 Japanese fiscal year begins, with the rate for chilled beef falling to 31.5 percent and frozen beef to 28.5 percent.
“These tariff rate gaps are significant, especially when you consider the strength of the U.S. dollar,” said USMEF President and CEO Philip Seng. “The yen is down about 13 percent year-over-year against the U.S. dollar, while the Australian dollar is down 9 percent. This is especially critical for price-sensitive items such as short plate, which has increased dramatically in price over the past year.”
Meat and Livestock Australia and Japanese retailers are taking full advantage of this opportunity to promote price savings on Australian beef. However, industry participants also know that Australia’s drought-induced high slaughter levels must come to an end soon, as rain in some regions of Australia is already causing a spike in cattle prices.
Further details regarding Japan’s imports of Australian beef under the JAEPA include:
- The tariff on frozen beef will be cut to 19.5 percent on full implementation, which takes place over 18 years. The tariff on fresh beef will be cut to 23.5 percent over 15 years.
- For Australia, Japan’s global safeguard (with a 50 percent snapback tariff) will be replaced with separate, Australia-specific safeguards for chilled and frozen beef. These safeguards are based on historic import volumes (130,000 metric tons for chilled beef and 195,000 metric tons for frozen beef) and will increase by 1,500 metric tons per year. The snapback duty is 38.5 percent.
- Imports of Australian beef variety meat will face reduced tariffs within a growing quota. Japan’s duty rate for most beef variety meat items is 12.8 percent.
- JAEPA will also reduce tariffs on imports of Australian preserved and prepared beef, under a growing quota.
Australia is the only major beef supplier to Japan that will enjoy reduced tariff rates in 2015. Mexico and Chile also have economic partnership agreements with Japan, but Mexico holds only 2 percent market share and Chile’s beef exports to Japan are minimal.