March 27, 2014

 

Japan may lower tariffs on Australian beef

 

 

In response to Canberra's strong call for Tokyo to make greater efforts to eliminate trade barriers, Japan is considering slashing its tariffs on Australian beef from the current 38.5% to the 20% range, negotiation sources said.

 

With the two countries aiming to reach a free trade agreement before the summit between Prime Minister Shinzo Abe and Australian Prime Minister Tony Abbott planned for early April in Japan, Tokyo has decided to make further concessions, the sources said.

 

On Wednesday (Mar 19), Japan and Australia held ministerial free trade talks in Tokyo but failed to bridge differences over how to deal with the beef tariffs, only confirming they will continue negotiations.

 

After meeting with Japanese farm minister Yoshimasa Hayashi, Australian Trade and Investment Minister Andrew Robb told reporters that they had good talks but added further discussions are needed.

 

According to the sources, Australia has called on Japan to reduce its tariffs on both frozen and chilled beef to 19.25%. However, as Australian chilled beef is competitive with some Japanese beef in the domestic market, Tokyo is mulling higher tariffs on chilled beef than on frozen beef.

 

Japan, for its part, wants Australia to cut its 5% vehicle tariff. Whether it will secure a concession from Australia over automobiles will likely depend on how substantially it will cut the beef tariffs.

 

Japanese trade minister Toshimitsu Motegi said after a separate meeting with Robb that there was significant progress on issues including the auto tariff.

 

Japanese fiscal and economic policy minister Akira Amari, who also met with Robb, told reporters they agreed to accelerate the free trade talks toward the summit.

 

Momentum in the seven-year-old negotiations has picked up recently. Robb expressed hope of striking a deal in April when he met with a Japanese ruling party lawmaker in February on the margins of a Trans-Pacific Partnership (TPP) ministerial meeting in Singapore.

 

Expectations are growing that Japan and Australia will sign an accord in July, when Abe is slated to visit Canberra. If a deal is realised, Australia will become the first major farm exporting nation to agree an FTA with Japan, which has been reluctant to open up its agricultural market to shield domestic farmers from cheaper foreign imports.

 

In 2012, around 60% of beef imported into Japan was from Australia, followed by about 30% from the US in value terms, according to data compiled by the Japanese farm ministry.

 

The two countries are apparently making greater efforts to conclude their bilateral talks against the backdrop of a stalemate in the broader US-led TPP free trade negotiations.

 

For Canberra, striking a bilateral deal with Tokyo before the TPP could give it an advantage in beef exports, where the country competes with the US. Japan could also use it as a tactic to urge the US -- which has also sought to increase its beef and other farm exports to Japan -- to compromise on the TPP.

 

Amari, who doubles as minister in charge of the TPP, said that remaining issues related to the Japan-Australia FTA encompass some issues in the TPP talks, and any progress in forming bilateral FTAs would stimulate the TPP negotiations at the same time.