USMEF Sees TPP Boost in Japan

CHIBA CITY, Japan (DTN) -- Phil Seng, president and CEO of the U.S. Meat Export Federation, said the time is not ripe to make any volume increase forecast for exports to Japan, but the Trans-Pacific Partnership agreement (TPP) will surely enhance the competitiveness of U.S. meat on the Japanese market.

"It will bring down the tariffs on beef and give us a level playing field," Seng said in an interview last week with DTN at the FOODEX international trade show.

Seng noted that under the Australia-Japan free trade agreement, the Japanese tariffs on beef don't go down as low as those under the TPP agreement. But after 15 years of the latter's coming into effect, the tariffs will go down lower for beef from signatory countries than under the agreement with Australia.

Under the Australia-Japan FTA, which came into effect in January last year, Japanese tariffs on beef, normally at 38.5%, will drop to 23.5% for chilled beef within 15 years. The tariff for frozen beef will fall to 19.5% within 18 years.

Conversely, under the TPP, the tariffs will fall overall to 9% over 15 years.

Seng also pointed out that the yen has recently appreciated to the U.S. dollar but weakened to the Australian dollar, giving U.S. exporters a currency rate edge over their Aussie counterparts. Also, the drought in Australia has reduced the country's cattle herd size. "So we think our (beef) exports (to Japan) will increase," Seng said.

U.S. beef exports to Japan hit $1.58 billion in 2014, but dropped roughly 18% in 2015. The U.S. spent more than a decade rebuilding the beef market to Japan after being cut off in 2003 following a case of bovine spongiform encephalopathy.

Pork exports ride on the same potential optimism with TPP, Seng said, as Japan's 20% tariff on ground, seasoned pork and 10% tariff on sausages will be eliminated in six years of the TPP's coming into effect. Japan's current 4.3% tariff on fresh, chilled, and frozen pork cuts will immediately be cut in half, with the residual duty eliminated in 10 years.

The "Gate Price" system will remain, but Japan will immediately reduce the specific duty on pork cuts from its previous maximum charge of 482 yen per kilo to 125 yen, with a further reduction to 50 yen by the 10th year.

The U.S. is looking for a rebound in pork exports to Japan after seeing both volume and value decline in 2015. U.S. pork exports to Japan fell to $1.59 billion, the lowest since 2009.

Seng said one hears a lot of talk about Japan's population declining, which would reduce demand for overall food exports. He emphasized, however, that tourists in Japan last year numbered 20 million. "We see that going up to 30 million" a year, Seng said.

So the total Japanese population is going down, but the tourist population is increasing, which creates a huge potential in the hotel and restaurant business, Seng said. "You take that, with the tariffs declining, and it's a terrific opportunity," he said.

Also participating in FOODEX, Ohio-based pork processor Sugardale's director of international business Avy Konor dared tread where Seng wouldn't, predicting that the TPP would allow his company to at least double its business in Japan. "Japanese companies will approach us," Konor said.

Jay Theiler, vice-president for Idaho-based Agri Beef, said the TPP's coming into effect will be an important step for his company. Because of the Australia-Japan FTA and resultant tariff reduction for Australian beef, U.S. beef exporters to Japan are 8.5 percentage points behind their Aussie competitors, Theiler said. "Each year we delay the TPP, we will see erosion of competitive advantage to Australia," he said.

(CC/AG)

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