Japan’s tariff on beef imported from New Zealand and the other nine countries in the Comprehensive and Progressive Trans Pacific Partnership trade deal was slashed from 38.5% to 26.5% on December 30 last year and will fall to 9% by 2033 through a series of smaller cuts.
American producers had those gains snatched away from them when United States President Donald Trump withdrew from the deal just days after being elected in November 2016.
Trump said he preferred one-on-one talks so the US could use its status as the world’s largest economy to maximum effect to get the best possible deal from negotiating partners.
He began courting Japanese Prime Minister Shinzo Abe soon afterwards and it appears now the bet has finally paid off with the pair announcing at the G7 meeting in France a deal has been reached in principle.
International media reported tariffs on American beef and pork will be brought into line with those on imports from CPTPP countries in return for Trump postponing proposed tariffs on Japanese car imports.
Japan also agreed to buy US corn to supplement insect-damaged local crops.
Tariff cuts could happen as soon as the end of this year with the agreement expected to be signed by the end of September and not required to run the gauntlet of lawmakers in the US Congress to enter into force.
The Government’s agricultural trade envoy Mike Petersen said beef imports from CPTPP countries have had two tariff cuts since the agreement entered into force.
If the tariff on US beef was cut immediately to equal the tariff on CPTPP beef then the fallout for NZ exporters would be marginally greater than if the cuts were delivered in installments as they had been for CPTPP countries.
“The question we would raise is are they on the same trajectory (to lower tariffs) as us in CPTPP but again that is not yet clear.”
Despite losing an advantage over their American rivals Petersen said the tariff changes are unlikely to be a disaster for NZ beef exports to Japan.
At this stage exporters shouldn’t expect a repeat of the fallout from Australia’s trade deal with Japan in 2015.
Then a significant differential opened up between NZ and Australian beef exports as a result of the tariff on Australian beef being slashed to 27.2% while NZ remained stuck at the global rate of 38.5%.
NZ beef exports to Japan crashed by 30% and the pressure went on CPTPP negotiators to level up the playing field as soon as possible.
“I have always believed and the sector has the view that as long as we have got a level playing field we are happy to compete with anyone,” Petersen said.
NZ is Japan’s fourth largest source of beef imports behind Australia, the US and Canada.
Beef exports to Japan increased 11% in April compared to the same month last year before CPTPP took effect.
