New Zealand beef exports to Japan lifted in volume and value in the year to end June for the first time in five years. However, there’s a downside to that.
The Meat Industry Association’s newly released annual report for the year ending 30 June 2017 shows a lift of 26 percent in volume and seven percent in value for the year, which the trade association puts down to a general increase in demand for beef.
While the lift is good news, it will also have a short-term negative effect, according to MIA chief executive Tim Ritchie.
Without a free trade agreement with the market, New Zealand’s beef exports to the market are subject to a beef tariff of 38.5 percent, which rises to 50 percent if imports rise above certain trigger levels. The higher tariff applies to all other importing countries that do not have a free trade agreement with Japan and is the maximum level that can be charged under the General Agreement on Tariffs and Trade set by the World Trade Organisation.
“The export trigger level for frozen product was reached in the second quarter of the year, meaning importers will be charged the higher tariff rate for the rest of Japan’s financial year, which ends on 31 March 2018”, he explains.
Ritchie notes Australia’s free trade agreement with Japan means it has a significantly lower tariff of 27.2 percent for beef, giving Australia a major advantage over New Zealand and other major competitors.
“It’s growing export volumes have significantly contributed to the trigger breach and there is also the danger the trigger will be breached for chilled product as exporters divert from frozen to chilled activity,” he says.
For that reason, gaining agreement amongst the remaining Trans-Pacific Partnership countries (TPP-11) is very important for New Zealand beef exporters.
ANZCO chairman Sir Graeme Harrison was amongst a New Zealand International Business Forum (NZIBF) delegation of business leaders meeting Japanese counterparts in Tokyo in early September.
The trip was reported by NZIBF chairman Malcolm Bailey to have been very constructive during which participants discussed ways to support the continuing TPP process.
“I am pleased to say there is strong alignment between the New Zealand and Japanese business communities about seeing TPP enter into force as soon as possible between those remaining members who, like us, see value and advantage in the agreement,” he said.
The NZIBF delegation meeting with representatives of the Keidanren (Japan Business Federation), Japan Chamber of Commerce and Industry (JCCI) included Bailey and ANZCO chair Sir Graeme Harrison, Business NZ chief executive Kirk Hope, Japan-NZ Business Council chair Ian Kennedy and NZIBF’s executive director Stephen Jacobi.
The Tokyo meetings highlighted the importance of the economic relationship between New Zealand and Japan, says Bailey.
“Japan and New Zealand are close partners and friends. TPP has the potential to transform the economic relationship and both of us stand to gain enormously from its provisions in relation to trade and investment between us and with the other TPP partners. As a high quality, comprehensive and ambitious agreement, TPP can set new standards for economic integration in the Asia-Pacific region,” says Bailey.
While in Tokyo NZIBF members called on the Vice-Minister of Foreign Affairs Manabu Horii and also discussed the outlook for agricultural reform in Japan, met with the New Zealand business community and participated in a roundtable with Japanese trade academics.
New Zealand sheepmeat shipments to Japan were similar to the previous year at 8,263 tonnes worth $78 million, but there are no tariffs for this product. It is an important market for chilled product, which accounts for 40 percent of the volume shipped to the country.