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.”


Huawei in early talks with US firms to license 5G platform: executive

Updated 19 October 2019

Huawei in early talks with US firms to license 5G platform: executive

  • Currently there are no US 5G providers and European rivals Ericsson and Nokia are generally more expensive
  • Huawei has spent billions to develop its 5G technology since 2009

WASHINGTON: Blacklisted Chinese telecoms equipment giant Huawei is in early-stage talks with some US telecoms companies about licensing its 5G network technology to them, a Huawei executive told Reuters on Friday.
Vincent Pang, senior vice president and board director at the company said some firms had expressed interest in both a long-term deal or a one-off transfer, declining to name or quantify the companies.
“There are some companies talking to us, but it would take a long journey to really finalize everything,” Pang explained on a visit to Washington this week. “They have shown interest,” he added, saying conversations are only a couple of weeks old and not at a detailed level yet.
The US government, fearing Huawei equipment could be used to spy on customers, has led a campaign to convince allies to bar it from their 5G networks. Huawei has repeatedly denied the claim.
Currently there are no US 5G providers and European rivals Ericsson and Nokia are generally more expensive.
In May, Huawei, the world’s largest telecoms equipment provider, was placed on a US blacklist over national security concerns, banning it from buying American-made parts without a special license.
Washington also has brought criminal charges against the company, alleging bank fraud, violations of US sanctions against Iran, and theft of trade secrets, which Huawei denies.
Rules that were due out from the Commerce Department earlier this month are expected to effectively ban the company from the US telecoms supply chain.
The idea of a one-off fee in exchange for access to Huawei’s 5G patents, licenses, code and know-how was first floated by CEO and founder Ren Zhengfei in interviews with the New York Times and the Economist last month. But it was not previously clear whether there was any interest from US companies.
In an interview with Reuters last month, a State Department official expressed skepticism of Ren’s offer.
“It’s just not realistic that carriers would take on this equipment and then manage all of the software and hardware themselves,” the person said. “If there are software bugs that are built in to the initial software, there would be no way to necessarily tell that those are there and they could be activated at any point, even if the software code is turned over to the mobile operators,” the official added.
For his part, Pang declined to predict whether any deal might be signed. However, he warned that the research and development investment required by continuously improving the platform after a single-transfer from Huawei would be very costly for the companies.
Huawei has spent billions to develop its 5G technology since 2009.