Japan-Australia EPA takes effect Thursday

An economic partnership agreement between Tokyo and Canberra will take effect Thursday, with Australia becoming the first major farm produce exporter to have an EPA with Japan.

It is Japan’s 14th EPA. Under the agreement, Japan will lower its tariff rates on Australian beef in stages, while Australia’s tariffs on Japanese vehicles will be abolished within three years.

With major retailer Aeon Co. selling Australian beef at a 10 percent discount in December, some Japanese consumers have already benefited from the EPA.

Japanese farmers are concerned about the expected surge in agricultural products from Australia. They are also worried that pressure for lower prices on Japanese beef and other domestic meat will increase.

From Thursday, Japan’s tariffs will be cut from the current 38.5 percent to 32.5 percent for chilled Australian beef and to 30.5 percent for frozen. The rate will eventually fall to 23.5 percent for chilled beef in 15 years and to 19.5 percent for frozen in 18 years.

Japan will introduce a safeguard measure that calls for bringing its tariffs on Australian beef back to the current levels if imports exceed a certain level.

Tariffs on Australian wine will be scrapped over seven years. For cheese, Japan will expand existing tariff-free import quotas for certain products and introduce quotas for other types.

These steps are expected to help Japanese households, which currently face rising food prices due to the yen’s weakening.

Automakers are expected to benefit from the pact, with vehicles accounting for some 45 percent of Japan’s overall exports to Australian on a value basis.

Australia will immediately abolish tariffs on Japanese cars with engine displacements of 1,500 cc to 3,000 cc. Tariffs on larger vehicles will be removed within three years.

Toyota Motor Corp. has already lowered the prices on its new vehicles exported to Australia.

The EPA may affect Tokyo’s bilateral negotiations with the United States over the Trans-Pacific Partnership, which also involves Australia.

As Australia and the United States are rivals in the Japanese beef market, some U.S. beef industry groups are likely to call for an early conclusion of the TPP talks, sources familiar with the issue said.

In a related development, Howard Smith, president of the Cattle Council of Australia, said in a statement Tuesday that the Australia beef industry is now ahead of competitors in securing better access to the Japanese market.

“Japan continues to be an integral market for the Australian beef industry, and the Cattle Council sees opportunities to grow Japanese demand for Australian beef through the bilateral EPA,” he said.

Australian beef accounts for more than 50 percent of Japan’s beef imports, while the share of U.S. beef stands at a level slightly below 40 percent, according to Meat & Livestock Australia.

Source: Japan Times