20160129-USDA-USDA_Tariff_Reforms_and_the_Competitiveness_of_U.S._Beef_in_Japan_2016.1.29._31页_1mb

Summary of the Report: Tariff Reforms and the Competitiveness of U.S. Beef in Japan

Core Content

This report examines the impact of tariff reforms, particularly the Japan-Australia Economic Partnership Agreement (JAEPA), on the competitiveness of U.S. beef in the Japanese market. It also analyzes Japanese beef consumption trends, production, and import sources, highlighting the role of U.S. and Australian beef in Japan's market and the implications of trade policies.

Main Points

• Japan's Beef Import Status: Japan is one of the largest beef importers globally, with beef and beef offal imports totaling over $3.5 billion in 2014. The U.S. and Australia are the primary sources, accounting for 90% of these imports.

• U.S. and Australia's Share: In 2014, Australia accounted for 51.8% of the total quantity and 46.8% of the value of Japan's beef imports, while the U.S. accounted for 38.2% of the quantity and 43.6% of the value.

• Impact of BSE Ban: The BSE outbreak in 2004 led to a ban on U.S. beef imports, which significantly reduced U.S. market share. However, since 2006, U.S. beef imports have steadily increased, though still below pre-ban levels.

• Market Access and Tariff Reforms: The JAEPA, signed in 2014 and effective in 2015, includes significant and immediate tariff reductions for Australian beef, giving it a competitive advantage over U.S. beef. The U.S. currently faces a 38.5% tariff on chilled and frozen beef, while Australia's tariffs are reduced to 32.5% and 30.5%, respectively, within the first few years of the agreement.

• Import Demand Analysis: The report uses an import demand model to analyze how changes in market access affect import composition and competitiveness. It finds that JAEPA could lead to a significant increase in Australian beef imports and a corresponding decrease in U.S. imports, unless similar tariff reductions are granted to the U.S.

• Beef Product Differentiation: Japanese consumers differentiate between U.S. grain-fed beef and Australian grass-fed beef. Chilled beef, which is more heavily marbled, is preferred for traditional dishes like gyudon, while frozen beef is more commonly used in fast food and home cooking.

• Beef Offal Imports: Beef offal represents a larger share of U.S. imports than Australian ones. Japan classifies certain cuts as offal, which face lower tariffs. In 2014, the U.S. supplied 54% of Japan's beef offal imports, while Australia supplied 32%.

• Sanitary and Phytosanitary Measures: Japan has strict sanitary measures to prevent the spread of diseases like BSE and FMD. These measures have historically limited U.S. and Canadian beef imports, although they have been eased over time.

• Free Trade Agreements (FTAs): Japan has entered into FTAs with Mexico, Chile, and Australia, offering preferential access to the Japanese market. These agreements include provisions to reduce tariffs and waive the global safeguard for certain products.

• Future Prospects: The report suggests that if the U.S. gains similar tariff reductions under an agreement like JAEPA, it could maintain or even increase its market share in Japan. However, without such reforms, U.S. beef is expected to lose ground to Australian beef.

Key Information

• Import Trends: In 2014, Japan imported 579,000 MT of beef and beef offal, representing nearly 61% of domestic consumption.

• Production Decline: Japanese beef production has declined over the past two decades, with only 1,800 MT CWE exported in 2014.

• Consumer Preferences: Japanese consumers prefer U.S. grain-fed beef for certain dishes and Australian grass-fed beef for others. The market is segmented based on product type and origin.

• Tariff Impact: The JAEPA significantly reduces tariffs on Australian beef, which could lead to a net gain of $130 million for Australia and a decline for the U.S. in the Japanese market.

• Safeguard Measures: Japan retains the right to impose its global safeguard on U.S. beef imports, which can increase tariffs to 50% if imports exceed a certain threshold.

• Economic Implications: The report highlights the importance of tariff reforms in maintaining U.S. competitiveness in Japan. The U.S. has not regained its pre-ban market share, despite increased exports since 2006.

• Trade Agreements: The JAEPA is the first EPA to offer tariff reductions on chilled and frozen beef without a TRQ regime, providing Australian exporters with a significant advantage.

Conclusion

The report concludes that JAEPA could significantly benefit Australian beef at the expense of U.S. beef in Japan. However, if the U.S. achieves similar tariff reductions, it could offset the competitive disadvantage. The analysis underscores the importance of market access reforms and the role of sanitary measures in shaping the dynamics of the Japanese beef market.