Final June import statistics released yesterday in Tokyo confirmed fears that...

Final June import statistics released yesterday in Tokyo confirmed fears that a flood of pork imports in the second quarter of the year has triggered Japan’s automatic pork safeguard.  The safeguard provisions will take affect August 1, 2001.  Under the safeguard, if total pork imports exceeded 183,850 tons for the April to June period, Japan’s gate price, or minimum import price would increase by 24.6 percent, from 524 yen per kg to 653 yen per kg.

May imports totaled about 72,520 tons, above industry estimates that the May total would fall in the range of 65,000-70,000 tons. Adding April imports of 65,538 tons, June imports in excess of a modest 45,551 tons were enough to trigger the safeguard, and June imports actually totaled about 51,650 tons, placing total imports just 6,100 mt over the trigger volume.

The safeguard increases the pork import gate price from 524 yen/kg. ($1.93/lb.) to 653 yen/kg. ($2.41/lb.). Pork products entering Japan at less than the gate price pay a duty equal to the difference between the gate price and the CIF price, plus a 4.3% ad valorem duty. Products entering above the gate price level pay only the 4.3% duty, creating an incentive to exporters and importers to structure shipments with an average CIF value at or above the gate price. A higher minimum import price created by the safeguard will make it more difficult to structure shipments to meet the gate price, and is also likely to raise wholesale prices.

The safeguard mechanism is triggered when the cumulative quantity of pork imports on a quarterly basis exceeds that of the average level of imports in the corresponding quarters over the past three Japan fiscal years by 19%. The safeguard was last triggered after imports surged in the 1st two months of JFY 1996. The safeguard mechanism in the form of the higher gate price was implemented on July 1 of that year and remained in effect until the end of March 1997. And because total imports in JFY 1996 exceeded the annual special safeguard trigger, higher duties remained in effect for the first quarter of JFY 1997.

The higher minimum import prices will remain in effect for the remainder of the Japan's fiscal year through March 31, 2002.

-- USMEF --