US beef exporters, unhappy after President Donald Trump pulled out of a multilateral trade pact in 2017, stand to sell more meat in Japan after the US leader and Japanese Prime Minister Shinzo Abe cut a deal this week to slice into trade tariffs.
But agriculture experts say that for now, that boost may be lean: exports of US beef to Japan are already high enough to be close to a "safeguard" level at which higher tariffs kick in.
The deal Trump and Abe signed on Wednesday will gradually reduce tariffs on US farm goods, Japanese machine tools and other products while staving off the imminent threat of higher US duties on Japanese autos - Tokyo's biggest concern in the talks.
Under the deal, Japan will cut tariffs on US agricultural products, including beef, to around levels granted to signatories of the multilateral Comprehensive and Progressive Agreement for Trans-Pacific Partnership, also known as TPP-11, the deal that emerged after Trump walked away in 2017.
Ahead of next year's US presidential election, those lower tariffs will help Trump soothe US farmers - a key electoral constituency - who have been hurting from the US-China trade war, even as they were still smarting from the loss of low-tariff prospects in the TPP.
"US farmers have been pretty hard hit by the US-China trade friction. How to ensure their profits is vital to (Trump's) re-election strategy so it was important to quickly take some steps," said Junichi Sugawara, a senior researcher at Mizuho Research Institute.
Japan will permit lower import tariffs on 242,000 tons of US beef in fiscal 2020, with that quota rising to 293,000 tons in fiscal 2033. Japan imported 254,529 tons of US beef in the latest fiscal year through the end of March.
"Since beef imports are close to the safeguard level, it's hard to think imports from America will rise rapidly," Sugawara said. "A level playing field with (rival beef supplier) Australia has been ensured so profits will likely rise, but the amount will probably not rise so much."
Tariffs on US beef imports, currently 38.5 per cent, will fall in stages to nine per cent by fiscal 2033. TPP-11 members - such as Australia - saw tariffs fall to 26.6 per cent this year after the pact took effect in December 2018 and will see further decreases to nine per cent, also by fiscal 2033. "We think the tariff gap has slowed growth in Japan," US Meat Export Federation spokesman Joe Schuele told Reuters by telephone. He added, though, that meat exports had "held up fairly well".
Japan's imports of US beef grew 10.3 per cent in fiscal 2018/19 from the previous year, with their share of the market for imported beef remaining steady at about 41 per cent. Imports from Australia, America's main competitor, rose 4.1 per cent while their market share dipped a bit, to 50 per cent from 52.1 per cent.
A Japanese farm ministry official said beef imports are affected by several factors, including exchange rates, price and customer preferences, not just tariffs.
Australian Associated Press