U.S.-Japan Trade Negotiations of Extreme Importance to U.S. Beef and Pork

The Office of the U.S. Trade Representative (USTR) has confirmed that initial meetings aimed at reaching a trade agreement with Japan will be held April 15-16.

USMEF President and CEO Dan Halstrom notes that it is extremely important for rapid progress to be made in these negotiations if U.S. beef and pork are to remain competitive in the largest value destination for U.S. red meat.

Halstrom points out that U.S. beef is already at a significant tariff rate disadvantage in Japan compared to its largest competitors - including Australia - that are part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Other major beef suppliers participating in CPTPP are Canada, New Zealand and Mexico. Japan imposes an import duty of 38.5% on U.S. beef, while the rate for CPTPP countries is 26.6%. The CPTPP rate will decline to 9% over the next 14 years.

On the pork side, the U.S. industry is disadvantaged not only by CPTPP (where the major pork suppliers are Canada, Mexico and Chile) but also by a new economic partnership agreement between Japan and the European Union. Halstrom notes that the most immediate impact of these two agreements is the reduction of Japan's tariff rates for seasoned ground pork and processed pork products. Seasoned ground pork from the U.S. faces a 20% duty in Japan compared to 13.3% for EU and CPTPP suppliers, and their rate will fall to zero by 2023. The CPTPP and EU duty rates for sausages entering Japan will also fall to zero by 2023 and for ham and bacon the rate will reach zero by 2028.

Transcript

Joe Schuele: The office of the U.S. Trade Representative has confirmed that it is ready to begin trade agreement negotiations with its counterparts in Japan. In this U.S. Meat Export Federation report, President & CEO Dan Halstrom talks about the urgency of such an agreement to the U.S. beef and pork industries.

Dan Halstrom: By far our largest trading partner on beef and pork is Japan. The No. 1 market; has been for a long, long time. The combined market of the two species of over $3.5 billion annually in sales, and the reality is that even though we're setting records today on beef into Japan we are at a severe disadvantage because we are not a part of the CPTPP, and each year that we go with the most recent decrease in duty for the CPTPP countries being April 1, each year that we go we will become more of a disadvantage, so it's imperative that we get negotiations started and the fact that we are starting is very, very good news because it's showing our trade partners in Japan, our customers, that we are serious about getting on a level playing field with our international competition like Australia.

Joe Schuele: The U.S. pork industry is disadvantaged not only by CPTPP but also a new trade agreement between Japan and the European Union.

Dan Halstrom: On the pork side, Europe is our largest competitor in Japan. We have two categories in particular that have already seen dramatic impacts today. One is seasoned ground pork. It's a 100,000-metric ton market for U.S. pork, mainly bonus picnics as the raw material, and we're already seeing our share start to erode. The other area is the pork processed meats area. We have several members that are very, very active in Asia, specifically in Japan, and they're seeing an impact there where we're at a duty disadvantage. And not to leave out fresh pork — fresh and frozen primal cut pork. It's a complicated system but suffice it to say we are slowly getting less competitive on those as well. So time's of the essence on both beef and pork. It's great that it started but we have to keep it moving down the road as quickly as possible.

Joe Schuele: For more information, please visit USMEF.org. For the U.S. Meat Export Federation, I’m Joe Schuele.

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The U.S. Meat Export Federation (www.USMEF.org) is the trade association responsible for developing international markets for the U.S. red meat industry. It is funded by USDA; the beef, pork, lamb, corn and soybean checkoff programs, as well as its members representing nine industry sectors: beef/veal producing & feeding, pork producing & feeding, lamb producing & feeding, packing & processing, purveying & trading, oilseeds producing, feedgrains producing, farm organizations and supply & service organizations.