US-Japan trade deal takes effect on Jan 1

TOKYO, Jan. 1 – The US-Japan trade agreement entered into effect on January 1, 2020. Immediately, Japan lowered tariffs on US products, including beef and pork, to the level equivalent to the rates under the Trans-Pacific Partnership Agreement (TPP). For Japan, the bilateral pact is the third significant trade agreement that follows the TPP and the Economic Partnership Agreement (EPA) with the European Union (EU). In the fiscal year 2018, the total value of agricultural imports from the member countries of the three trade agreements to Japan exceeded 99% of the total. With the new pact, however, the country is granting its competitors greater access to its agricultural market than ever.

The deal lowered its tariff on American beef to 26.6% from 38.5%, although it may affect profoundly on domestic beef producers. In the fiscal year 2018, Japan imported 255,000 tons of beef from the U.S. Signing the deal with the U.S. means that tariffs on over 99% of imported beef are cut, including those on Australian beef, which have already been lowered under the TPP. Japan is likely to see significant impacts on the supply and demand balance of Japanese beef.

A safeguard measure for beef can be triggered if the total amount of beef imports exceeds around 240,000 tons per year. As for the fiscal year ending in March 2020, the safeguard can be put if beef imports reach 60,000 tons in the three months from January through March. In the fiscal year starting in April 2020, the tariff on beef will be 25.8%, and the safeguard threshold will be 242,000 tons per year. When Japan is going to invoke the safeguard, it will propose the U.S. to have talks on the possibilities of imposing an additional tariff within ten days after such a decision.

Tariffs on premium pork were lowered to 1.9% from 4.3%, while those on low-priced pork per kilo were cut to 125 yen from 482 yen, but Japan decided to maintain a gate price system. It also cut tariffs on hard-type cheese and milk whey, but not the tariff on rice.

The farm ministry of Japan estimated that the volume of domestic agricultural, forestry and fishery products would decrease by up to 200 billion yen because of the US-Japan trade pact and the revised TPP (TPP11). However, the government said it would take measures to keep the agricultural income and production volume. The cost to implement such measures are already included in the supplementary budget for the fiscal year 2019, and by spending around 325 billion yen, it plans to create new incentive plans to support the production of Japanese beef and dairy cattle, according to the ministry.

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