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Beef at fore of Japan/US trade talks

27 June 2019

Australian beef continues to focus on building its brand and maintaining the high level of loyalty it enjoys in its largest export market as trade talks between Japan and the US play out.

Andrew Cox, MLA’s International Business Manager for Japan, said price isn’t the only thing delivering benefits to Australian beef in this market.

“We’re the most popular among Japanese consumers in terms of key perception measures. We’re highly trusted and considered the highest quality compared to other importing nations,” he said.

“It’s critical we maintain this status.”

Negotiations underway

The US and Japan are in discussions on a Trade Agreement on Goods, with beef and vehicles at the forefront. Ahead of the G20 summit to be held in Osaka in late June, US beef producers have stepped up lobbying for action from their government on the Japanese market in light of the signing two years ago of the 11-nation Trans-Pacific Partnership Agreement (TPP), which includes Australia.

Australian beef has been on a tariff depreciation schedule since 2015, when the Japan-Australia Economic Partnership Agreement – the first deal Japan signed with a major agriculture nation – commenced.

The more recent TPP saw the decline steepen, with the eventual level of tariffs on beef imports settling at 9% within 16 years. Countries like Canada, New Zealand and Mexico have the same schedule, leaving the US (President Donald Trump pulled out of the TPP) at a lonely 38.5pc. Australia, which is currently at 26.6% tariff in Japan, and the US account for the vast majority of imported beef in Japan.

Japan is Australia’s largest market on a volume and value basis, worth more than A$2.4 billion and with over 300,000 tonnes shipped in 2018, up 8% on the year before.

Supply constraints in Australia and pressure from the US has contributed to a 9% decline so far this year, but Andrew said Japan was a highly valuable and very large market that would always be a key destination for Australian beef.

Beef a big ticket item

Andrew said the dialogue with the US was very topical in Japan at the moment, with trade typically covered as mainstream news.

“While it’s impossible to say exactly what’s being negotiated, clearly beef is a big ticket item, and the US is looking to reach a deal fast,” he said.

The Japanese are looking to negotiate lower tariffs on their vehicles going into the US – their largest overseas auto market. Japan’s vehicle industry is extremely valuable to its economy, with exports to US alone worth >US$50 billion/year.

There are some areas where Australian and US beef don’t tend to compete in Japan, Andrew explained.

Australia supplies most of the large hamburger chains, while the US supplies large food service chains with certain cuts like short plate, for example. However, on restaurant menus and supermarket shelves, millions of Japanese consumers are making a choice every day between Australian and US beef.

“Australia never expects an unfair advantage over other nations,” Andrew said.

“We believe the TPP deal was the best deal for all parties because it involved multilateral, comprehensive agreement which improves the economies of all nations participating.”