One year after TPP: Japan sees big surge in meat and fruits import, wariness prevailing ahead of US-Japan trade deal

TOKYO, Dec. 31 – One year has passed since the Trans-Pacific Partnership Agreement (TPP) took effect on December 30, 2018. Under the 11-country trade pact, duties on certain products were reduced or eliminated. Its signatories, primarily meat and fruits producing countries, have aggressively expanded their access to Japan, and Japanese farmers were thrown into a market that is freer than ever before. Japan has also signed the Economic Partnership Agreement (EPA) with the European Union (EU) and will sign the US-Japan trade deal on January 1, 2020. Marked wariness is prevailing among Japanese.

-Canadian pork and beef: exports to Japan expanding

“Japan has become the largest importer of Canadian products, and TPP has offered a further opportunity to us,” said an official from Canadian Pork International in November this year, while explaining that the association of Canadian pork exporters welcomes the move.

Trade statistics of the Ministry of Finance of Japan shows the amount of Japan’s overall pork imports from January to November this year rose 4% to 886,671 tons compared to the same period a year ago. Meanwhile, imports from Canada increased by 5%. In April, Canada topped the U.S. for the first time in the monthly pork exports to Japan. “Canadian pork is already popular in Japan in terms of quality, and the reduced duties have given us price competitiveness as well,” said a major importer of Canadian pork in Japan. This company is now strengthening its marketing activities based on quality and price advantages.

With the country’s labor shortage becoming increasingly serious, imports from Mexico, which primarily sells meat after primary processing, also jumped 16%.

As for beef, overall imports remained steady compared to the same period a year ago, but imports from TPP signatories grew significantly with Canada and New Zealand boosting exports to Japan by 95% to 39,730 tons and 32% to 17,368 tons, respectively. “The price of higher-range products went down after the duty cut, causing consumers’ shift from the US products,” a meat seller in Japan explained. On the contrary, imports from Australia, the major beef trade partner of Japan, fell 5% year-over-year because of the rise in local prices.

The retail price of domestic dairy cows, which is assumed to compete with imported beef, is on the decrease since the beginning of the year. The research by the Agriculture & Livestock Industries Corporation shows a retail price of beef brisket in category “others” in fiscal 2019 (until November) was 386 yen per 100 grams, down 9% from the previous year. The category “others” includes meat from dairy cows.

-Grapes and apples: more imported products on shelves

Today, you find a lot more imported fruits on supermarkets’ shelves, and clearly, many of them are from TPP member nations.

Tariffs on grapes were eliminated immediately under the trade pact, pushing the amount of grape imports up by 27% to 43,556 tons. In particular, imports of grapes from Australia and Mexico jumped 25% and 122%, respectively. One wholesaler said, “Japanese consumers like imported grapes as they are seedless and their skin is edible.” “Their prices are down, too, thanks to the removal of tariffs, and that makes a big difference,” he noted.

Apple imports also increased by 30%, with New Zealand boosting apple exports to Japan by 35%. Domestic apple producers have been challenged by extreme weather and aging population, and imported apples can “make up for the shortage of domestically-produced apples,” said one person from a wholesale company. But there is a risk that domestic growers may lose their share in the market.

-Wine and dairy products: price competitions getting fierce

Wine imports increased 7% to 261,359 liters. Tariffs on wine became zero immediately after the Japan-EU EPA became effective, and the rise in Japan’s wine imports came mostly from Europe. Still, imports from Mexico and New Zealand grew by 15% and 7%, respectively.

The rise in the amount of imported wine may intensify the competition in the industry, a person from a brewery of “Japan Wine” in Yamanashi Prefecture said. “In Japan, more consumers choose wine at an affordable price,” he noted.

As for dairy products, the amount of natural cheese imports grew 6% to 270,900 tons.

-Japan should keep eye on TPP impact (Comments from Kan Higashiyama, associate professor, Faculty of Agriculture, Hokkaido University)

Many of us were concerned about the impact (of the TPP) on meat and fruit products. Imports of products in those categories are truly growing. It’s important for Japan to keep an eye on the change in the volume and the impact on domestic price item by item and make sure to take necessary measures domestically.

Our concern for the future is how we can secure the money to implement such measures. Duties and markup had been stable revenue sources for Japan. However, they are becoming less dependable year by year. Can the country find an alternative source of revenue in the future? The government needs to show a clear framework.

Tariffs will be even lower after April as the pact will go into its third year. That will make imported products even more competitive. Japanese producers are also required to take measures, not price-wise, but by adding higher value to their products, for example.

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