February 22, 2016

Japan market is US pork producers' reward from TPP

US pork producers consider the increased access to the Japanese market as the most important benefit they will get from the Trans-Pacific Partnership, or TPP, which was signed in Auckland, New Zealand, on Feb. 4.
 

The US National Pork Producers Council (NPPC), in a recent comment submitted to the US International Trade Commission, noted that Japan has been viewed for many years by the US agriculture community as a market of enormous potential. Its economy being second only to China's in the region, Japan is the US' fourth-largest agricultural export market overall.

US food and agricultural exports to Japan in 2014 totaled $13.1 billion. Specifically Japan is the top US market for pork, valued in 2014 at nearly $1.8 billion. Despite this, according to the NPPC, which comprises 43 state pork producer organisations, a substantial barrier to pork imports remained in Japan that had to be addressed satisfactorily in TPP. It consists of a complex system of tariffs called the "Gate Price." Pork entering Japan priced above a pre-established Gate Price is assessed a low import duty in percentage terms, while pork priced below the Gate Price is assessed a higher variable specific duty (yen per kilogram).

"The effect of this system has been that almost all pork shipments to Japan had to be priced above the Gate Price to get the lower percentage tariff and avoid the higher variable charge", NPPC said.

As a result, NPPC said, most US pork exports to Japan have been in the high-end categories (such as loins and tenderloins) while shipments of lower-priced cuts, such as hams, where US product is highly competitive, have been limited. "In the absence of the Gate Price system, the United States would be much better positioned to compete fairly for a share of the Japanese market in lower-priced pork cuts", it said.

Under TPP, Japan has committed to the phase-out of tariffs on pork products arriving at prices below the Gate Price with the exception of fresh, chilled and frozen pork, as well as on products above the Gate Price no later than year 11 of TPP. --Rick Alberto