Australia is set to boost beef exports to Japan after the two countries reached a trade agreement, analysts said on Tuesday, snatching U.S. market share and adding to pressure on the United Sates to seal its own trade deal.
Australia and Japan clinched a basic trade deal on Monday to cut import tariffs, with the impact expected to be felt most by Australian beef producers and Japanese car exporters.
"Australian beef exports to Japan should rise," said Vyanne Lai, agricultural economist, National Australia Bank. "The tariffs on Australian beef will be 8 percent lower than on U.S. supplies immediately and will get progressively lower over a number of years."
Japan is Australia's largest customer for beef exports, which make up more than a third of Australia's total A$3.8 billion ($3.52 billion) in agricultural exports to the country, according to government figures.
Australian currently supplies about half of all Japan's imported beef and is set to export about 280,000 tonnes in the 2013/14 season, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.
This is down from nearly 90 percent 10 years ago when U.S. sales to Japan were limited by curbs following a case of mad cow disease, a brain-wasting condition formally known as bovine spongiform encephalopathy.
Under the bilateral free trade deal, tariffs on frozen beef exports to Japan will fall from 38.5 percent to 19.5 percent over 18 years, while tariffs on chilled beef will fall from 38.5 percent to 23.5 percent over 15 years.
The agreement is front loaded and once signed, Australian beef exporters will have an immediate advantage over U.S. sellers, who face the same 38.5 percent tariff.
Japan and the United States are also pushing for a two-way trade deal, a crucial part of a broad U.S.-led Trans-Pacific Partnership (TPP) before U.S. President Barack Obama arrives in Japan later this month.
TRADE MISSES
Despite the gains for beef, Australian farm organsiations expressed disappointment that some other commodities appeared to have won few benefits from the trade deal with Japan.
Australia's small horticulture market should gain, but Australian dairy and sugar producers were the most aggrieved, with high tariffs staying in place.
Australian sugar sales, which account for about a third of Japan's imports, will see lower tariffs for international standard sales, but industry group CaneGrowers Australia said much of Australian exports are specialised grades, on which tariffs will remain at 70 percent.
"We expect to see Australian exports to Japan continue to slide," said Paul Schembri of the Australian Sugar Alliance.
Cheese sales to Japan, worth A$415 million in the 2012/13 season, will have the quota for duty free imports increased, but tariffs on all other sales will remain at 29.8 percent. Dairy farmers said they were extremely disappointed.
Source:- in.reuters.com
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