Japan ups tariffs on US beef, giving Aussie meat the edge

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Japan’s use of the ’safeguard trigger’ could have implications for Australian beef producers. (ABC Rural: Kim Honan)

ABC Rural | 28 July 2017

Japan ups tariffs on US beef, giving Aussie meat the edge

By Jodie Gunders

Australia’s beef industry has been buoyed today by news that Japan is likely to announce it will dramatically increase tariffs on US beef imports.

Japan’s Ministry of Agriculture, Forestry and Fisheries is set to invoke ’a snapback’ on imports, to protect Japan’s domestic cattle producers from rapid rises in imports.

The news has been welcomed by many following a temporary import ban by China on some Australian beef.

Beef market analyst Angus Brown said the snapback mechanism only applied to countries that did not have trade agreements with Japan.

"If imports from a country that doesn’t have an economic partnership agreement rise more than 17 per cent from the year earlier, it will trigger the increase in tariffs from 38.5 per cent to 50 per cent and that’s only on US frozen beef imports into Japan," he said.

Happily for Australia, it does have an economic partnership with Japan — a free trade agreement signed in 2015.

Under the trade agreement, Australian frozen beef attracts a tariff of 27.2 per cent, around half that imposed on US imports under the snapback measure.

Snapback could be good news for Australian industry

Japan’s so-called safeguard trigger had not been used in more than a decade against the US and it could have massive implications for Australia.

Analyst Simon Quilty said it would make Australian beef far more attractive to the Japanese consumer.

"Just to try to put it in perspective, what it would mean if a frozen rib eye was to go into that market, it relates back to a price for the Japanese of about a $2.50 difference as a direct result of the difference in tariff," he said.

Chairman of the Australian Meat Industry Council Lachie Hart helped pioneer Australian beef exports to Japan.

He said the news from Japan was very welcome at a tough time for the industry, already impacted by the strong Australian dollar.

"Certainly that’s having a bigger impact globally for our Australian exports at a time when processers are really struggling under a very difficult trading environment," he said.

"The Aussie dollar hasn’t helped the trading circumstance … [but] this is certainly going to open up another opportunity for Australian exporters to hopefully get product into those markets at reasonable prices."

Mr Hart said the news also highlighted the benefits of pursuing bilateral trade agreements for Australian exporters.

"I think Japan’s a great example of where we work very hard as an industry, with government, to get in place a great agreement that’s going to work for Australian exporters for many years and Japan’s a great example of that," Mr Hart said.

But the joy could be short-lived according to Mr Quilty who warned Australian beef exporters would only have a limited window to take advantage of any increase in tariffs on US beef.

"I would say by January next year, the Japanese will be looking again to be buying out of the US, and they will be controlling this much better than what they have in recent times," he said.

source: ABC Rural