Following its accession to the World Trade Organization in 1995, Japan relaxed its trade barriers. Even so, Japan continues to employ three (gate-price, ad-valorem and safeguard) tariff mechanisms on most pork product imports, reports USDA’s Economic Research Service (ERS).
However, Japan has recently ratified trade agreements with the U.S., European Union (EU), United Kingdom (UK), and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) countries, which comprises Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, that will virtually remove these restrictions. Given that essentially all of Japan’s pork imports originate in these trade agreement partner countries, the trade agreements may greatly impact the Japanese pork market, researchers note.
Pork exports to Japan are estimated to increase, with the U.S. having the highest estimated gains, ERS reports.
“This potential boost in foreign competitiveness could result in lower domestic production, higher import volumes and thus increased availability of lower-cost foreign pork for Japanese consumers,” researchers explain. “This can be seen in the following model estimates that assume the gate price system imposes a burden equal to a 10% ad valorem tariff.”
The estimated changes in value in 2028, relative to the 2018 baseline, are as follows:
• By 2028, Japan’s pork imports would increase by 3.6% for carcasses and half-carcasses, 12.2% for unprocessed meat cuts, and 13.9% for processed pork products.
• Japan’s domestic production would decrease by 4.2, 11.6, and 11.8% for carcasses and half-carcasses, unprocessed meat cuts, and processed pork products, respectively.
• Total pork exports to Japan would increase in value (in millions) by $281.0, $244.5, $232.8, and $0.21 for the U.S., EU, CPTPP and UK, respectively.
• Most of these export gains to Japan would come from the unprocessed pork sector, with gains of $168.6, $201.3, $210.5, and $0.21 million for the U.S., EU, CPTPP and UK, respectively.
• The remainder of the gains would primarily be from the processed pork sector, with an additional $112.3, $43.1, and $22.3 million in exports from the U.S., EU and CPTPP, respectively. The UK does not currently compete in this sector.
• The carcass and half-carcass sector is extremely small, and export increases in this sector would only have a marginal impact on the total pork exports of each country.
• Societal well-being of the United States, CPTPP, and EU would increase by $59.3 million, $32.8 million, and $17.8 million, respectively.
“If the U.S.-Japan Trade Agreement (USJTA) agreement did not exist, the U.S. would be subject to Japan’s WTO gate price tariff system. In this hypothetical scenario, results indicate that the U.S. would lose a large portion of its market share to Japan’s other trade agreement partners, with the 2028 U.S. market share falling from 34% to 23%. The total value of U.S. pork exports to Japan also would decline by $385.9 million from 2018 levels,” ERS reports.
The study was authored by Eric Davis, Ethan Sabala, Dylan Russell and Jayson Beckman and USDA ERS.
