May 2, 2008

 

Australia-Japan fail to reach agreement on farm products in FTA talks

 

 

Against mounting concerns about food security, Japanese officials have again rejected Australian requests to liberalize agricultural trade as part of negotiations over a possible free trade agreement.

 

The four-day talks ended Thursday for a fifth round of FTA negotiations and while making some progress on trade in services and investment, officials again butted against what for Japan are the sensitive farm product areas, an Australian official said Friday (May 2, 2008). 

 

"We had robust discussions on agriculture," focussing on beef and dairy, said the official, who is familiar with the talks and spoke on condition of anonymity.

 

"We are asking Japan to liberalize all restrictions on all agricultural products," he said.

 

Before this week's talks, Australia gave Japan supplementary requests on beef and dairy that covered details of all the trade restrictions that Australian exporters face and what they want removed, he said.

 

"The Japanese said no to all of those requests, arguing that beef and dairy are far too sensitive for them to remove any of those restrictions," the official said. "The Japanese said all the tariffs they maintained in the beef sector were based on careful calculation of exactly what protection was needed to ensure Japanese producers didn't suffer from foreign competition."

 

Australia is a major supplier to Japan of raw and lightly processed farm, mineral and energy products with total merchandise exports reaching AUS$31.84 billion in 2007, compared with imports from Japan of AUS$18.04 billion, comprising manufactured products, such as autos and parts.

 

Australia is the second-largest beef exporter in the world after Brazil, in an annual trade worth about AUS$5 billion. Australia exported 377,864 boneless tonnes of beef valued at AUS$1.91 billion to Japan in calendar 2007, and is a major supplier of other farm products, including dairy products and wheat.

 

Australia hopes to have greater access to the Japanese market but faces high barriers and import tariffs from Japan, such as a 38.4 percent tax on beef imports.

 

In many countries, rising global food prices and tightening supplies are spurring some nations to raise more or hold existing trade barriers.

 

Japan has said it cannot liberalize sensitive sectors as it would lead to "catastrophic consequences" for Japanese producers but Australia is trying to argue in considerable detail that simply is not the case, he said.

 

Liberalizing farm trade comes down to "sheer common sense," the Australian official said, citing a Japanese 500 tonne tariff rate quota for skim milk powder reserved for uses such as school lunches in Okinawa and the international airline trade.

 

These sort of restrictions make it hard to see how such barriers will protect local dairy producers, he said.

 

Japan's Diet has agreed that sensitive farm products should be excluded from an FTA with Australia.

 

The official said beef and dairy will have to be revisited at the next round of talks in Tokyo late July. More broadly, the Australian official said the fifth round of FTA negotiations this week was productive and useful. Talks also covered intellectual property rights protection, competition policy, financial services and rules of origin customs procedures.