More beef with the Japanese government

Well, it wasn’t hard to see this one coming. Although I must admit, I thought it wouldn’t happen until shortly after the ban on U.S. beef imports was lifted.

The Australian Broadcasting Corporation today ran this story on fears that Japan would raise the tariff on frozen beef imports 11.5 % to 50%, up from the current 38.5 %.

If any of this sounds vaguely familiar, that’s because it’s all been done before.

Following Japan’s first mad cow hysteria a few years back, Japanese beef consumption fell, for domestic beef at least. To compensate for the fall in supply, more beef had to be imported. (Those of you in Japan at the time might remember Yoshinoya’s now sadly ironic 100% American Beef campaign.) The resulting increase in imports triggered the tariff, which took effect on August 1, 2003 and lasted until the following April.

Now there is talk of that same tariff taking effect this August as well.

How can Japan get away with this you ask?

Well, it’s easy. Under the Uruguay Round, Japan agreed to lower tariffs on imported beef from 50% to the current 38.5%. However, it retained the legal right to reinstitute the 50% tariff in the event that imports increased 17% or more on a quarterly basis.

The reasoning behind allowing such recourse was to safeguard domestic producers against sudden surges in imports, which is very much the idea behind other types of safeguards also allowed under WTO regulations.

According to the WTO:

safeguard measures are defined as “emergency” actions with respect to increased imports of particular products, where such imports have caused or threaten to cause serious injury to the importing Member’s domestic industry.

The catch is that these temporary measures were meant to protect against unfair trade practices. They were never intended to be used as an unfair trade practice.

Theoretically, safeguards give domestic producers of cattle or any other traded good time to restructure the industry or take some other sort of defensive measures to increase competitiveness. But the fact is that the competitiveness of Japanese cattle farmers is not the issue here.

The issue here is that domestic beef consumption is rising to once normal levels, and that has automatically triggered the tariff. Ironically, as pointed out by an article in yesterday’sAsahi print edition (sorry, I couldn’t find this online), imports of frozen beef are actually 28% below 2004 levels!

Clearly the danger here is not for Japanese cattle farmers, but for Japanese consumers who will inevitably have to bear the cost of the tariff and its misuse by their government. The cost of beef has already risen by 20% wholesale and 10% retail since the ban on U.S. imports. Now consumers face another potential price hike because of the tariff.

As for the winners, we have the domestic beef industry, in spite of turning up 15 cases of BSE in recent years, and agriculture interests within the government, which doesn’t make out too badly itself, given the destination of those potential tariff revenues.

3 thoughts on “More beef with the Japanese government”

  1. I can’t believe that you didn’t make any references to the cheesesteak post in this article.

    Seriously though- when was the 100% American beef campaign? I do remember after the US beef ban there was a similar campaign in McDonald’s, with large posters stressing their “100% Australian Beef” burgers.

  2. It is such a sorry sight to see Japan, once a mighty industrialized powerhouse, relying on import/export tactics to keep the value of its currency. Meanwhile, its young people are roaming streets to look for jobs.

    The more a country plays this currency game the poorer it becomes. Japan must open up its economy and compete as a free market nation.

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