Japan | Triggering of Pork Safeguard Imminent | In an unfortunate repeat of ...
Japan
Triggering of Pork Safeguard Imminent
In an unfortunate repeat of 2001, the Japanese Pork Safeguard looks likely to trigger after the first quarter of Japan’s April-March fiscal year. Recently released Japanese import data for May show monthly pork imports at 71,185 metric tons (mt). This brings cumulative imports for the first quarter of the Japanese Fiscal Year (April to June 2002) to 165,476 mt. With one month left in the first quarter, cumulative imports are only 41,561 mt short of the safeguard trigger level of 207,037 mt. The triggering of the safeguard, and the resulting 24.6 percent increase in the gate price, appears imminent. Once triggered, the Japanese government will raise the gate price on August 1 and it will remain at 653 yen per kilogram until the beginning of the next Japanese Fiscal Year (JFY) on April 1, 2003.
The Japanese Pork Safeguard triggers when the cumulative quantity of imports on a quarterly basis exceeds by 19 percent the average level of the corresponding quarters in the three previous Japan fiscal years. The average level of imports for the first quarter of JFY 1999, 2000, and 2001 was 173,981 mt. If imports for the first quarter of JFY 2002 exceed this by 19 percent (207,037 mt), the Safeguard triggers. The Safeguard system was designed to protect the domestic pork industry from volatile surges in imported pork. Recent trade patterns, however, suggest that the system actually encourages import surges when traders believe that triggering is imminent. Because the trigger level for 2003 is based on the average imports for 2000, 2001, and 2002, exporters have an additional incentive to make large shipments since this will raise the 2003 trigger threshold. In 2001, imports exceeded the trigger level of 183,850 mt by a mere 5,312 mt.
While the safeguard will raise tariffs and slow imports, the Japanese trade is reportedly reacting calmly to a situation that most expected in the wake of the Japanese bovine spongiform encephalopathy (BSE) outbreak and the resulting increase in demand for pork. USMEF’s 2002 pork export forecasts remain unchanged, since USMEF assumed that the safeguard would trigger and that tariffs would rise in August.
For a graph showing monthly imports of pork into Japan and the prominent spikes in trade when the Safeguard is about to be triggered, please see the following link.
http://www.usmef.org/Misc_News/02_SafeguardGraphs_2.pdf
For background information about the Japanese Pork Safeguard, please see the USDA July 2001 publication, Japan's Safeguard on Pork Imports, at :
http://www.fas.usda.gov/dlp/highlights/2001/japansafeguard.pdf.