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Japan Dodges Beef Tariff Row with US as Imports Stay Low

30 July 2018

JAPAN - Japan's imports of beef have come in below a level that would have triggered an automatic tariff hike, avoiding a potential flare-up in trade tensions with US President Donald Trump.

Imports of frozen beef totaled about 90,000 tons in the quarter ended June, below the roughly 104,000 tons that would have activated a so-called safeguard mechanism, the Finance Ministry said Friday.

The safeguard raises tariffs to 50 per cent from 38.5 per cent for the rest of a fiscal year when import volume climbs more than 17 per cent on the year in any quarter, reports Nikkei Asian Review.

That hurts mainly US beef, since the hike does not apply to Australia and other big producers with which Japan has signed economic partnership agreements. Together, American and Australian beef account for about 90 per cent of Japanese frozen beef imports.

US Trade Representative Robert Lighthizer told lawmakers on Thursday that beef is one area where Japan imposes "unfair barriers to US exports," suggesting that he would raise the issue in an upcoming meeting with Japanese counterpart Toshimitsu Motegi.

The beef safeguard was activated in 2017 for the first time in 14 years and raised tariffs until 31 March. Japan's meat industry issued a sigh of relief this time because importers bear the cost of higher tariffs.

"Every company was careful about their import volume to avoid activating the safeguard again," said an official from the Japan Meat Traders Association.

The high level of imports in the year-earlier quarter meant that the safeguard was less easily triggered this time.

It also avoided drawing the likely ire of President Trump as he campaigns to narrow US trade deficits with countries like Japan and China by pushing for "free, fair and reciprocal" trade.

"Who knows what will happen if the safeguard kicks in again," a Japanese government source said before the quarterly import figures were announced.

Frozen US beef is used in dishes like gyudon, a Japanese fast-food staple consisting of seasoned beef and onions over rice.

Others highlight the mechanism's destabilizing effect on Japan's beef imports, which surged after the tariff reverted to the lower level in April. Import volume from the US and other countries subject to the safeguard fell 20 per cent on the year in January, 60 per cent in February and 50 per cent in March before rising roughly 70 per cent in April.

Industry insiders had warned that the safeguard might be reactivated as overall beef import volume climbed 30 per cent on the year in April. But figures for May and June came in about 10 per cent below year-earlier levels.

The Finance Ministry began to study proposals last year to base the safeguard trigger on six-month or annual imports instead of quarterly figures. Some think a longer interval would make procurement easier, while others argue that the safeguard can be deployed more flexibly under the current system.

TheCattleSite News Desk

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