For US beef exporters, Japan trade deal levels playing field but sales surge unlikely

Exports of US beef to Japan are already high enough to be close to a “safeguard” level at which higher tariffs kick in. (File/Shutterstock)
Updated 26 September 2019

For US beef exporters, Japan trade deal levels playing field but sales surge unlikely

  • The deal Trump and Abe signed on Wednesday will gradually reduce tariffs on US farm goods
  • Japan will permit lower import tariffs on 242,000 tons of US beef in fiscal 2020

TOKYO: US beef exporters, unhappy after President Donald Trump pulled out of a multilateral trade pact in 2017, stand to sell more meat in Japan after the US leader and Japanese Prime Minister Shinzo Abe cut a deal this week to slice into trade tariffs.
But agriculture experts say that for now, that boost may be lean: exports of US beef to Japan are already high enough to be close to a “safeguard” level at which higher tariffs kick in.
The deal Trump and Abe signed on Wednesday will gradually reduce tariffs on US farm goods, Japanese machine tools and other products while staving off the imminent threat of higher US duties on Japanese autos — Tokyo’s biggest concern in the talks.
Under the deal, Japan will cut tariffs on US agricultural products, including beef, to around levels granted to signatories of the multilateral Comprehensive and Progressive Agreement for Trans-Pacific Partnership, also known as TPP-11, the deal that emerged after Trump walked away in 2017.
Ahead of next year’s US presidential election, those lower tariffs will help Trump soothe US farmers — a key electoral constituency — who have been hurting from the US-China trade war, even as they were still smarting from the loss of low-tariff prospects in the TPP.
“US farmers have been pretty hard hit by the US-China trade friction. How to ensure their profits is vital to (Trump’s) re-election strategy so it was important to quickly take some steps,” said Junichi Sugawara, a senior researcher at Mizuho Research Institute.

‘Level playing field’
Japan will permit lower import tariffs on 242,000 tons of US beef in fiscal 2020, with that quota rising to 293,000 tons in fiscal 2033. Japan imported 254,529 tons of US beef in the latest fiscal year through the end of March.
“Since beef imports are close to the safeguard level, it’s hard to think imports from America will rise rapidly,” Sugawara said. “A level playing field with (rival beef supplier) Australia has been ensured so profits will likely rise, but the amount will probably not rise so much.”
Tariffs on US beef imports, currently 38.5 percent, will fall in stages to 9 percent by fiscal 2033. TPP-11 members — such as Australia — saw tariffs fall to 26.6 percent this year after the pact took effect in December 2018 and will see further decreases to 9 percent, also by fiscal 2033. “We think the tariff gap has slowed growth in Japan,” US Meat Export Federation spokesman Joe Schuele told Reuters by telephone. He added, though, that meat exports had “held up fairly well.”
Japan’s imports of US beef grew 10.3 percent in fiscal 2018/19 from the previous year, with their share of the market for imported beef remaining steady at about 41 percent. Imports from Australia, America’s main competitor, rose 4.1 percent while their market share dipped a bit, to 50 percent from 52.1 percent.
A Japanese farm ministry official said beef imports are affected by several factors, including exchange rates, price and customer preferences, not just tariffs.
Trump on Wednesday praised the overall US-Japan deal, which he said would open up Japanese markets to $7 billion worth of US products, as a “huge victory for America’s farmers, ranchers and growers.”
Some trade experts, however, saw it differently.
“The US can tell its farmers, who are in a pinch, that it won concessions from Japan,” said Takashi Imamura, a general manager at Marubeni Corp’s research institute. “But considering the scale of America, $7 billion is not such a big achievement.”


South Korea seeks arrest of Samsung heir in succession probe

Updated 04 June 2020

South Korea seeks arrest of Samsung heir in succession probe

  • Jay Y. Lee faces a return to jail just a little over two years after being released from detention

SEOUL: South Korean prosecutors have requested an arrest warrant against Samsung Group heir Jay Y. Lee, they said on Thursday, in the investigation of a controversial 2015 merger and alleged accounting fraud in a suspected bid to aid his succession plans.
The move spells fresh trouble for Lee, who, if arrested, faces a return to jail just a little over two years after being released from detention in February 2018.
Lee already faces trial on a charge of bribery aimed at winning support to succeed ailing group patriarch Lee Kun-hee, and which involved former President Park Geun-hye, and spent a year in detention until the bribery case was suspended in 2018.
Prosecutors said they sought Lee’s arrest on suspicions of stock price manipulation and audit rule violations, among other offenses.
In a statement, Lee’s lawyers expressed “deep regret” at the prosecution’s decision to seek his arrest, adding that he had fully cooperated with the investigation while Samsung was going through management crises.
Prosecutors have been investigating suspected accounting fraud at drug company Samsung Biologics after the Korean financial watchdog complained the firm’s value had been inflated by $3.7 billion in 2015.
Prosecutors contend the violation helped boost the value of its major owner, Cheil Industries, which counted Lee as its top shareholder, and merged with Samsung C&T, a de facto holding firm, Yonhap news agency said.
Samsung requested an outside review of the investigation to weigh the validity of the indictment and the Seoul Central District Prosecutors’ Office is following the necessary procedures, it said in a statement.
Last month, prosecutors questioned Lee, 51, over the latest investigation. He also apologized for a series of controversies around his succession planning.
Lee’s year in detention followed separate charges that he bribed Park to win government support for the 2015 merger which helped tighten his control of South Korea’s top conglomerate.