Australia to get tariff reduction on beef exports to Japan

Australia to get tariff reduction on beef exports to Japan

U.S. meat exporters say Australia's tariff advantage will eventually end up being 10% on chilled beef product

U.S. meat exporters initially weren't too concerned about the Japan-Australia Economic Partnership Agreement, scheduled to enter into force on Jan. 15. But now that the U.S. dollar has strengthened against both the Yen and Aussie dollar, exported U.S. beef is a bit pricier.

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Ahead of Jan. 15, imported beef from all of Japan’s major suppliers is charged a 38.5% tariff rate. But under the JAEPA, the rate for chilled Australian beef will be reduced to 32.5% and the rate for frozen beef will drop to 30.5%, says U.S. Meat Export Federation Economist Erin Borror.

U.S. meat exporters say Australia's tariff advantage will eventually end up being 10% on chilled beef product

Tariffs will be reduced again on April 1 when the new Japanese fiscal year begins, with chilled beef going to 31.5% and frozen beef to 28.5%, Borror says.

Slowing Aussie supplies
While the strengthening of the dollar does add an extra layer to the issue, she says Australian beef supplies are likely to tighten in the near future, which could help narrow the gap in prices.

"Australia has been in drought-induced elevated slaughter levels for over two years now," Borror notes. "This is not sustainable."

She says the herd is at a two-decade low, and estimates that "some point soon" Australia will slow its slaughter rate, boosting its beef prices.

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