Secretary Perdue expresses concern over impact on US beef sales.
WASHINGTON – Following an announcement July 27 that the Japanese government will be increasing its tariff rate on imports of frozen beef from the United States, US Secretary of Agriculture Sonny Perdue released a statement expressing his concern.

“I am concerned that an increase in Japan’s tariff on frozen beef imports will impede US beef sales and is likely to increase the United States’ overall trade deficit with Japan. This would harm our important bilateral trade relationship with Japan on agricultural products,” Perdue said in the statement. “It would also negatively affect Japanese consumers by raising prices and limiting their access to high-quality US frozen beef.” 

The announcement was a result of rising imports of frozen beef in the first quarter of the Japanese fiscal year (April-June). The increase in imports triggered a safeguard which resulted in an automatic increase to Japan’s tariff rate under the World Trade Organization (WTO). The increase on tariffs of frozen beef to the US, from 38.5 percent to 50 percent, will begin Aug. 1, and last through March 31, 2018. The tariff will only affect exporters from countries that don’t have free trade agreements with Japan.

According to the US Meat Export Federation (USMEF), “As agreed to in 1994 in the WTO Uruguay Round, Japan maintains separate quarterly import safeguards on chilled and frozen beef, allowing imports to increase by 17 percent compared to the corresponding quarter of the previous year. The duty increases from 38.5 percent to 50 percent when imports exceed the safeguard volume. Japan’s frozen beef imports in the 2016 Japanese fiscal year were lower than in previous years, thus the growth in imports during this first quarter of the current fiscal year exceeded 17 percent.” The growth in imports was driven in part by a strong demand for beef in Japan’s foodservice sector.

“USMEF recognizes that the safeguard will not only have negative implications for US beef producers, but will also have a significant impact on the Japanese foodservice industry,” explained USMEF President and CEO Philip Seng in a statement. “It will be especially difficult for the gyudon beef bowl restaurants that rely heavily on Choice US short plate as a primary ingredient. This sector endured a tremendous setback when US beef was absent from the Japanese market due to BSE, and was finally enjoying robust growth due to greater availability of US beef and strong consumer demand.”

The implications for US beef exports are significant because US frozen beef already faces a higher tariff than Australian beef (currently at 27.2 percent). This increase will leave the US at a wider tariff disadvantage if it’s moved up to 50 percent. The Australian tariff of 27.2 percent was established in the Japan-Australia Economic Partnership Agreement (JAEPA).

Japan has moved away from the quarterly safeguard mechanism in its recent trade agreements. Through the JAEPA, Japan transitioned from quarterly safeguards to an annual safeguard. Japan also agreed to similar terms in its economic partnership agreement with Mexico and in the Trans-Pacific Partnership (TPP). However, Japan’s economic partnership with the US dates back to 1994 when the quarterly import safeguards on chilled and frozen beef were implemented.

“USMEF will work with its partners in Japan to mitigate the impact of the safeguard as much as possible,” Seng said. “We will also continue to pursue all opportunities to address the safeguard situation by encouraging the US and Japanese governments to reach a mutually beneficial resolution to this issue.”

Perdue also said in his statement, “I have asked representatives of the Japanese government directly and clearly to make every effort to address these strong concerns, and the harm that could result to both American producers and Japanese consumers.”

US exports of beef and beef products to Japan totaled $1.5 billion last year, making it the top export market for the US.