January 12, 2007

Japan likely to extend the current safeguard measure in 2007
 

Japan's Ministry of Agriculture, Forestry and Fisheries (MAFF) has set the trigger levels of beef safeguard in Japan fiscal year (JFY) 2007, proposing that the current temporary tariff measures law for JFY 2006 be extended to JFY 2007.

It is likely to be approved by the government and to go into effect from Ap 2007.

The safeguard is a mechanism agreed to as part of the Uruguay Round of World Trade Organisation negotiations finalised in 1994 and allows Japan to lift tariffs when beef imports rise substantially. The beef tariff would go up to 50 percent from from 38.5 percent for the remainder of the JFY once the trigger level is exceeded.

The Japanese fiscal year runs from April to March, with trigger levels calculated to be 17 percent higher than imports of the same period in the previous year (calculated on a cumulative quarterly basis and separately for chilled and frozen beef).

The calculation method was altered for JFY 2006 in recognition of the extraordinary circumstance generated by the lifting of the ban on imports from the US. The safeguard for JFY 2006, now proposed for 2007 also, is based on an average of actual imports in JFY 2002 and 2003. If the revised method resulted in a lower trigger level, the usual method of calculating was to be used.

The proposed extension would allow slightly larger import volumes without triggering the increase of the tariff.

It is unlikely the trigger levels for chilled or frozen beef would be exceeded this fiscal year given the current restrictions on US beef imports and the drought-restrained supplies from Australia.

Imports of chilled and frozen beef were lower in the first two quarters of the JFY (ended September) than at the same time last year.

In the Q1 (April to June 2007), the most crucial period as it would affect the rest of the JFY if the safeguard is triggered, the trigger level has been calculated at 74,339 tonnes for chilled beef, while the actual chilled beef imports of the same period last year were 57,700 tonnes. This implies Japan would be able to import an additional 28.8 percent without triggering the safeguard. The trigger level for frozen beef is 78,475 tonnes for the June quarter 2007, and the actual imports in the June quarter 2006 were 67,073 tonnes, allowing up to a 17 percent increase before resulting in the higher tariff level.