Japan to Export Beef to Australia 2018

Insight – Increased competition for Australian agricultural exports in Nihon

12 May 2022

New free trade agreements (FTAs) are reducing Australia's tariff rate reward for some agricultural products in Japan (ABARES 2022). It's at present more of import than ever for Australian exporters to heave their competitiveness. They can practice this past maintaining reliable supply, ensuring nutrient safety and quality, and cultivating established business links.

New agreements such as the Australia-Republic of india Comprehensive Economic Cooperation Understanding and the Commonwealth of australia-United kingdom of great britain and northern ireland Costless Trade Agreement volition support Australian agronomical merchandise growth.

However, future growth will also require finding new ways to strengthen relationships with established markets such as Japan.

Implications for Australian exporters

Australia's tariff rate advantage in Japan is diminishing as tariff schedules in agreements are drawn down. However, this does non necessarily imply that Australia'southward agricultural trade with Nippon will autumn.

A range of factors influence trading decisions beyond tariff rates. These include:

• the strength of industry links
• demonstrating the benefits of Australia's agricultural produce, nutrient safety and quality
• continuing to evolve with consumer trends.

Nippon's contempo free trade agreements

In January 2015, the Nihon–Australia Economic Partnership Agreement (JAEPA) came into force. This was the first time Japan committed to a substantive trade understanding with a major agricultural exporting state. The agreement provided Australian exporters with a competitive advantage over other agricultural exporters by eliminating or reducing tariff rates and improving quota access.

Since JAEPA, Japan has expanded its free trade network to include other major agronomical exporting countries (Figure 1).

Japan'southward notable trade agreements since JAEPA include:

• 2018: Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
• 2019: Japan–European Union Economic Partnership Agreement (Japan-EU EPA)
• 2019: Nihon–Us Merchandise Understanding (JUSTA)
• 2020: The Britain–Japan Comprehensive Economic Partnership Agreement (CEPA)
• 2021: Regional Comprehensive Economic Partnership (RCEP).

Figure 1: Trade agreements signed by Japan

Commodity-level analysis

JAEPA provided Australian exporters with a competitive advantage for three of Commonwealth of australia'south largest agricultural exports to Nihon: beef, cheese, and wine. However, Australia's tariff and quota charge per unit advantages for these products are diminishing due to Japan's new FTAs.

Beefiness

On signing in 2015, the tariff for Australian beef exports to Japan fell from 38.v% to 32.5%. Tariff rates have continued to decrease in later years (Effigy 2).

Nippon's recent FTAs with the United states and CPTPP members include lower tariff rates for beef than JAEPA. Australian exporters have equal access under the CPTPP. Nevertheless, Commonwealth of australia no longer has a tariff advantage over its major competitors.

On 24 March 2022, the US and Japan reached an agreement to amend the beef safeguard under JUSTA. The new measures increased the competitiveness of US beef by reducing the take a chance of college tariffs.

Commonwealth of australia'south share of the Japanese beef market by volume has reduced from 51.3% in 2018 to 40.1% in 2021. This is due to increased competition from the US, Canada, New Zealand and United mexican states, and herd rebuilding past Australian farmers.

Australian beefiness remains highly sought later in Nippon, particularly in the retail sector. The easing of the COVID-19 pandemic will support demand for beef. However, the Japanese beefiness market is likely to be characterised by greater competition in coming years.

Figure 2: Japan beef tariff rates by selected trade agreement (2015 to 2036)

Cheese

JAEPA provided Australian exporters with duty-costless, Australia-only import quotas for selected cheeses. Since JAEPA, the European union, New Zealand and the Us have secured trade deals which improve their access for cheese exports to Japan.

Japanese cheese quotas are multiplex and vary substantially on a country-by-country basis. New state-specific cheese quotas for the EU, New Zealand and the Us accept led to increased contest in Nippon.

Since signing the Nippon-Eu EPA in 2019, the EU's share of Nihon's cheese import market has risen past seven.6% from 37.nine% in 2018 to 45.v% in 2021 (Figure 3). The Japan-Eu EPA also provided the EU with several advantages, including the absence of some local mixing requirements and protection of geographical indicators.

Japan'south demand for cheese rose strongly during the 1990s, merely consumption growth has slowed since 2000. Japan's unique diet has kept per capita cheese consumption relatively low at 2.7kg/yr, far below Western consumption:

• European Union (20.4kg/twelvemonth)
• United States (17.9kg/yr)
• Australia (11.8kg/year).

Increased abode cooking during the pandemic led many Japanese consumers to experiment with new recipes. This led to a 15% increase in natural cheese consumption at home. In that location is optimism that household cheese consumption will keep to grow post pandemic (USDA 2022).

Effigy 3: Japanese cheese imports past country (2010 to 2021)

Wine

Under JAEPA, tariffs on Australian wine take been progressively reduced to 0. Since the signing of JAEPA, Australian wine exports to Japan have increased by 26.6% from $twoscore.4 million in 2014 to $51.2 million in 2021.

The Nihon–European union EPA eliminated tariffs on Eu vino exports to Japan in 2018. The CPTPP, RCEP and JUSTA include staged tariff elimination schedules. These volition reduce tariffs to 0 by 2026 (CPTPP and JUSTA) or 2036 (RCEP) (Figure four).

Currently, the EU, Chile and Australia all export wine to Japan at a 0% tariff. This gives them an advantage over competitors like the US, Due south Africa and Argentina. Australian wine remains a relatively niche product in Japan. The European union dominates the middle- to high-stop wine market, while Republic of chile supplies the lower end of the market.

Wine consumption in Japan has risen over the last decade from 2.3 litres per capita in 2009 to 3.2 litres per capita in 2019 (OIV 2019). As Nihon's population continues to age, the need for loftier-quality wine is expected to increase (USDA 2019). Growing demand will back up increased vino imports. This will mitigate some of the impact of increased competition for Australian exporters.

Figure 4: Japanese bottled wine tariffs for selected trade agreements

Resources

The Australian Authorities's network of Agriculture Counsellors provided data for this article. More information about the Agriculture Counsellor network, including contact details, is available on the Section of Agronomics, Water and the Environment website.

Go to ABARES Insights for more evidence-based articles about Australian agronomics, forestry and fisheries industries.

Go to the DFAT Gratis Trade Agreement Portal to explore Australia's free merchandise understanding tariff rates.

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Source: https://www.austrade.gov.au/news/insights/insight-increased-competition-for-australian-agricultural-exports-in-japan

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