Why a Trade Agreement With Japan Is Needed for U.S. Beef Exports
Creators: name: Muhammad, Andrew
name: Griffith, Andrew P.
name: Muhammad, Andrew
name: Griffith, Andrew P.
Publisher: name: Unknown
Year: 2018
Subjects: subject: Agricultural and Food Policy
subject: International Relations/Trade
subject: why
subject: trade
subject: agreement
subject: with
subject: Japan
subject: needed
subject: U.S.
subject: beef
subject: exports
subject: comprehensive
subject: progressive
subject: trans-pacific
subject: partnership
subject: CPTPP
subject: tariff

description: The signing of the Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP) in March 2018 could disadvantage U.S. beef in Japan. Beef-exporting countries party to the agreement (e.g., Australia, New Zealand, Mexico and Canada) will see an immediate reduction and phase- down of tariffs from their current levels of 38.5 percent (muscle cuts) and 50 percent (select offal products) to 9 percent over a 15-year period. For some offal products, tariffs will be phased out completely (New Zealand Foreign Affairs and Trade, 2018). On the other hand, U.S. beef will continue to face tariffs of 38.5 percent to 50 percent, as well as a global safeguard tariff of 50 percent when imports exceed a specified level (Muhammad et al., 2016). Although Australia and Mexico have existing agreements with Japan, the proposed CPTPP tariff reductions are beyond those negotiated in prior agreements. The U.S. has free trade agreements with several CPTPP countries, but a major exception is Japan, which is the leading market for U.S. beef exports. In 2017, U.S. beef exports totaled $7.3 billion; Japan accounted for more than 25 percent of this total ($1.9 billion) (USDA, Foreign Agricultural Service, 2018). Understandably, the tariff advantage for a major competitor like Australia and smaller competitors like Canada, New Zealand and Mexico has raised concerns in the U.S. beef industry about its future in Japan. Japanese beef imports are largely split between the U.S. and Australia. While beef imports from other CPTPP countries are smaller by comparison, the proposed tariff reductions could make these countries more important players. For instance, the Government of Canada (2018) projects that Canadian beef exports to Japan will increase by 95 percent with full implementation of the CPTPP. The overall goal of this report is to examine how CPTPP tariff reductions in Japan could impact the competitiveness of U.S. beef, vis-à-vis Australian beef and beef from other CPTPP countries. While there is some evidence that Japanese consumers see U.S. and Australian beef as somewhat different (e.g., grain-fed versus grass-fed), prior research suggests that price competition is still important and that tariffs could affect the competitiveness of exporting countries (Muhammad et al., 2018). Based on recently published research on Japanese beef imports, we present findings of how tariff reductions for Australia and other CPTPP countries could impact U.S. beef in Japan. The recovery of U.S. beef in Japan since the bovine spongiform encephalopathy (BSE) ban was lifted in 2006 has been notable. However, these gains and the current status of U.S. beef in Japan could be in jeopardy if the U.S. does not obtain market access on par with CPTPP countries.