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International relations

US loses out as Japan cuts meat and wine duties for others

TPP members and EU reap benefits of rising consumer demand

American pork exports to Japan are down as Tokyo slashes tariffs of imports from other countries. (Photo by Takaki Kashiwabara)

TOKYO -- Japan is buying more pork, beef and wine from such countries as Canada, New Zealand and France after lowering tariffs via the revamped Trans-Pacific Partnership and its trade deal with the European Union, leaving the U.S. out in the cold.

Imports of pork from countries that have implemented the Comprehensive and Progressive Agreement for Trans-Pacific Partnership climbed 7% on the year in the first half of 2019, Japanese trade data released Tuesday shows. Imports from the U.S., which quit the TPP after President Donald Trump took office, were down 3%.

The data illustrates the degree to which lower tariffs from trade deals have put the U.S. at a disadvantage against other Japanese trading partners, just as Tokyo and Washington prepare for high-level trade talks to resume Thursday. The American side is all but certain to redouble its push for speedy tariff cuts to level the playing field.

The TPP cut Japan's tariff on high-quality pork to 2.2% from 4.3% immediately after taking effect Dec. 30, and further to 1.9% in April. This gave an additional boost to pork from Canada, which had already made inroads in the Japanese market in recent years.

"Supermarkets specifically ask for Canadian pork, which is of superior quality," a meat wholesaler said.

Japan has also imported more pork from European countries such as Denmark -- much of it frozen meat bound for processors and restaurants -- under the economic partnership agreement with the European Union that entered into force this February. Its pork purchases from the EU as a whole jumped 13% for the five months through June.

These gains by Europe and TPP countries come at the expense of the U.S., whose share of Japanese pork imports shrank 1.6 percentage points on the year in the first half of 2019.

Japan's imports of wine from countries in the revamped Trans-Pacific Partnership, such as this wine from New Zealand, have risen 8% so far this year.   © Reuters

The data showed similar trends in wine, with purchases from TPP countries up 8% for January through June. Imports from the EU jumped 25% for the five months after the implementation of that agreement, which immediately scrapped Japanese tariffs on wine. Imports of American wine slid 2% for the first half.

Since the Japan-EU deal took effect, Aeon Retail has held periodic sales offering three bottles of wine for 1,000 yen ($9.20). Its sales of European wine have climbed roughly 20% on the year for the five months ended June, with the Aeon unit noting that more people are buying wine in large quantities as the lack of tariffs makes it seem like more of a bargain.

Midsize supermarket chain Inageya reported growth sales of 26% for Italian red wine and 10% for French white wine. Suntory Holdings said it imported 20% or so more European wine in the first half of 2019 than a year earlier, citing lower prices for some products.

The divergence between the U.S. and trade deal beneficiaries was less pronounced in beef, where America and Australia together dominate around 90% of the Japanese import market.

Imports from TPP countries, including Australia, climbed 3% for the first half. Japan doubled its purchases from Canada, which held just 4% of the market in 2018. Imports from New Zealand and Mexico grew roughly 50% and 30%, while Australia saw a 5% drop due to high prices.

Japan also brought in 5% more American beef over the same period. American cattle are mainly grain-fattened and yield relatively fatty meat suited for such dishes as beef bowls.

"The market share of American beef dropped less than we'd figured it would after the TPP took effect," an importer said.

Even as lower tariffs make foreign products more competitive, prices of domestic beef and pork have not collapsed. The increased imports appear to be meeting rising domestic demand rather than eating into domestic business. Japanese producers "have not suffered a blow" from the trade deals, according to the Ministry of Agriculture, Forestry and Fisheries.

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