TOKYO -- Australia has secured its place as the top beef exporter to Japan, but with Tokyo hashing out a bilateral trade deal with the U.S., another beef powerhouse, Canberra is refusing to renegotiate the terms of the Trans-Pacific Partnership for fear that its cattlemen could lose out.
"Australia is not seeking to renegotiate the mechanisms within the [Trans-Pacific Partnership] around beef or any other products," Bridget McKenzie, Australia's agriculture minister, told Nikkei Monday in Tokyo.
Japan, however, is afraid that a flood of cheaper imports from the two nations could overwhelm its producers unless there are tighter import quotas that trigger higher tariffs.
The 11-member Trans-Pacific Partnership trade agreement grants Australia wide access to Japan's beef market through gradually falling tariffs -- Australian beef currently faces a 26.6% tariff, down from 38.5% five years ago.
But Japan has safeguard measures in place in case there is a surge in imports that puts undue hardship on its own producers. If imports from its TPP partners surpass the quota of 590,000 tons in a 12-month period, then tariffs shoot up, limiting imports.
Japan imports 60% of the beef it consumes, and Australian product accounts for half of that share. The U.S. comes in second among exporters. Australia does not want to lose any of the TPP safeguard quota to the U.S.
The 590,000-ton TPP safeguard quota was set assuming that the U.S. would eventually come around and be part of the pact even after Donald Trump withdrew on becoming president. But that never happened, and Australia has been enjoying a large window to export beef to Japan before special tariffs kick in.
On Sunday, Japanese Prime Minister Shinzo Abe and U.S. President Donald Trump reached a broad agreement on a bilateral trade deal. The final accord could be inked late next month. This puts the safeguard quota back into the spotlight.
If Tokyo were to set a safeguard import quota for the U.S. while leaving intact the one in the TPP that benefits Australia, Japan's ranchers would be even more exposed to competition from beef imports.
To protect Japanese beef, "We should coordinate with other nations to subtract the U.S. portion from the TPP safeguard import quota," said a lawmaker from Japan's ruling coalition, which counts agricultural interests as an important part of its base.
The U.S. trade deal would gradually cut Japanese tariffs on beef imports to 9% in fiscal 2033, the same level as for TPP partners. That would give a boost to U.S. beef producers, and create additional competition for Australia.
"We saw New Zealand and Canada increase their beef exports to Japan," said McKenzie. "The United States, as a non-[TPP] member, saw an increase in exports," she added, despite America not being part of the TPP.