March 28, 2022

 

Japan and the US strike new beef agreement

 

 

Japan and the US have announced an agreement to allow for more exports of US beef to Japan and lowers the chances of Japan implementing higher tariffs in the future, Reuters reported.

 

The agreement adds a new measure that requires three separate conditions to be reached in order for Japan to impose higher import duties on US beef for 30 days. Previously, there was only one condition.

 

A senior US official said the agreement will be enforced once the text is finalized and each country has completed a few remaining steps. Discussions were held for a year.

 

US data shows the country was the biggest beef exporter in the world, with over US$10 billion worth of beef and beef product sales.

 

The US exported over US$2.4 billion worth of beef to Japan last year.

 

Meat producers in the US have urged for an adjustment to the thresholds. They said US beef was at a competitive disadvantage compared against exporters who are Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP) members.

 

For Japan's safeguard tariffs to be imposed, the total beef imports from not only the US but also the 11 members of the CP-TPP must surpass the threshold set in the CP-TPP agreement.

 

A Japanese farm ministry official said the mechanism was in place for the TPP before the US exited those talks. The official said the new agreement is a way of returning the US to that scheme.

 

Japan and the US signed a separate bilateral free trade agreement in 2019.

 

Japan increased its "safeguard" tariff duty on US beef imports to 38.5% from 25.8% in March 2021 for 30 days, after U.S. beef imports reached 253,051 metric tonnes. This  surpassed the 242,000 metric tonnes trigger level. Demand for US beef has gone up in that period as a drought slowed imports from Australia.

This tariff hike led to both countries discussing the new agreement.

 

US beef is being exported to Japan at the normal 25% duty that was negotiated in the agreement for Japan's fiscal year 2021, which ends on March 31, 2022. The senior official said no higher temporary duties were expected in the current fiscal year.

 

-      Reuters