Saturday, March 30, 2024

NZ will get beef tariff benefit

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Despite the August 1 tariff hike from 38.5% to 50% on frozen beef, Japan’s imports have continued rising year-on-year. Japan Ministry of Finance figures  show a 26% year-on-year rise for total imports of frozen beef in the August-December period, from 911,419.04 tonnes in 2016 to 1,149,882.16 tonnes last year. 
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In the same period, imports of New Zealand product rose 4.56%, from 45,421.64 to 47493.99 tonnes.

A year-on-year increase shows up in the overall import data every month since the tariff hike. 

From 182,694.39 tonnes in August 2016, total imports rose 12.65% to 207,413.57 tonnes for the same month last year.

The jump was 18.09% percent in September, from 205,813.08 to 243,037.68 tonnes, 18.07% in October from 223,581.91 to 263,986.64 tonnes, 12.45% in November from 637,303.15 to 742,791.97 tonnes and 12.03% in December from 274,115.9 to 307,090.2 tonnes.

Imports of NZ frozen beef followed the year-on-year rising trend from August through October though they went slightly down in the last two months of last year.

The NZ product year-on-year leap was 19.9% in August, from 7440.48 to 8915.07 tonnes, 14.9% in September from 8052.38 to 9203.23 tonnes and 5.04% in October, from 8962.41 to 9414.26 tonnes.

Shifting to a downward trend, however, NZ beef fell 2.24% in November from 10,013.48 to 9788.8 tonnes and 7.12% in December from 10,952.87 to 10,172.61 tonnes.

It is precisely because of the constant rise in imports that the tariff snapback has been triggered. 

Whenever overall beef imports in a quarter exceed by more than 17% the import volumes in the same period of the previous year, tariffs rise from 38.5% to 50%.

When excessive imports show up only in the final figures for the entire preceding year, which come out in late April, the higher tariffs strike only in May and June of the new fiscal year. 

The rise is applied separately to chilled and frozen beef.

Tariff hikes under this system previously struck frozen beef in 1995 and 1996 and chilled beef in 2003, all on August 1. 

Under trade agreements with Japan, beef from Australia and Mexico is now exempt from the tariff snapback.

Japan Meat Traders Association (30 trading companies) executive director Shiroh Ohashi said demand for frozen beef has increased, especially for burger meat, which makes up the greater part of beef demand.

Import volumes sharply increased in September, mainly from Australia, but that was primarily because of customs clearance of unmarked stocks that had accumulated because of the yen’s exchange rate appreciation in September, with imports decreasing in October in reaction, Ohashi said.

Otherwise, not much has changed since the tariff hike. 

“Import volumes of chilled beef increased but that is considered to be due to an increase in meat eating in recent years,” Ohashi said.

Ohashi acknowledged that Australian grass-fed beef benefits from a price-competitive advantage over the NZ meat because of the Australia-Japan Economic Partnership Agreement (EPA).

Under the EPA, which came into effect on January 15, 2015, Japan’s tariff on Australian frozen beef is going down over a 15-year period to 19.5%. The tax now stands 27.2%.

However, when the Comprehensive and Progressive Trans Pacific Partnership (CPTPP) comes into effect, if the tariff rate under the Australia-Japan EPA is lower than the tax rate at the time of the TPP entry, the Australia-Japan EPA rate will be applied to each TPP country, Ohashi said.

Therefore, if the TPP goes into effect between April 2019 and March 2020, the tariff on frozen beef will be the same as that under the Australia-Japan EPA at 26.7%, he said.

“The difference between NZ and Australia will disappear.”

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