The impact of the Japanese frozen beef safeguard
25 September 2017
Frozen Australian beef will be assisted with a considerable tariff advantage in Japan for the eight months leading up to 31 March 2018.
The safeguard for the Japanese fiscal year quarter 1 was triggered on 1 August 2017, meaning the tariff on frozen beef imported to Japan from the US and other nations without an Economic Partnership Agreement (NZ, Canada) snapped back to 50% until 31 March 2018.
In contrast, frozen Australian beef will face a 27.2% tariff under the Japan-Australia Economic Partnership Agreement (JAEPA).
However, so far, the tariff differential has yet to slow US beef imports down. In fact, the latest data indicates that the four weeks after the snapback have seen the largest US exports to Japan for 2017 to date.
While the tariff differential will no doubt lead to some increased enquiries for Australian beef, there are also a number of reasons to be cautious:
- The most popular cut of frozen beef imported to Japan from US is shortplate – approximately 70% of total volume into Japan. The US has large supplies of this cut prepared in a specification the Japanese trade desires. For large foodservice customers, switching to an Australian supply is not as easy as it sounds.
- The US frozen beef tariff was already higher (38.5% than that faced by Australian beef, yet US market share has increased in 2017 due to availability and price factors, including the high Australian dollar, that are still present)
- Japanese customers have some other options available, such as increasing the amount of pork they use, and running down stocks of frozen beef.
The good news is that, with the JAEPA trade deal enacted, Australian beef is exempt from the difficult-to-manage quarterly safeguard system for chilled and frozen beef, replaced by yearly country specific safeguards (currently 135,000 tonnes for chilled and 200,000 tonnes for frozen) that are unlikely to trigger.
Also, in the enduring absence of any multilateral trade deals such as Trans-Pacific Partnership (TPP), Australia’s beef tariffs in Japan will continue to fall annually while others remain static. Ultimately this allows Australia to argue that the retail price of Australian beef is a fairer price for Japanese consumers with a lower tax component.
MLA International Business Manager – Japan & Korea
Join myMLA today
One username and password for key integrity and information Systems (LPA/NVD, NLIS, MSA & LDL).
A personalised online dashboard that provides news, weather, events and R&D tools relevant to you.
Customised market information and analysis.
Already registered for myMLA?