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Key Topic – Japan-Australia Economic Partnership Agreement

Japan-Australia Economic Partnership Agreement – An economic partnership agreement between Japan and Australia took effect Jan. 15, 2015, allowing Australia to benefit from an immediate and significant tariff advantage over U.S. beef. Tariffs on chilled and frozen Australian beef (which had been 38.5% – the rate that still applies to U.S. beef) dropped by 6 percentage points and 8 percentage points, respectively, upon implementation. Tariffs dropped again on April 1, 2015 when the next Japanese fiscal year began, with chilled beef at 31.5% and frozen beef at 28.5%. On April 1, 2016, tariffs declined by an additional percentage point, so the rates now stand at 30.5 percent for chilled beef and 27.5 percent for frozen. The duty rate is still 38.5 percent for U.S. beef and imports from most other suppliers.

These tariff advantages are especially significant when considering the strength of the U.S. dollar versus the Australian dollar. Although U.S. beef exports rebounded impressively in 2016 and have posted a strong start in 2017, the tariff gap will be more difficult to overcome when Australia’s herd rebuilding moderates and its beef production rebounds.