FFTC Agricultural Policy Platform (FFTC-AP)

 

ORIGINAL DOCUMENT

「日EU・EPAにおける品目ごとの農林水産物への影響について」(Written in Japanese) http://www.maff.go.jp/j/kanbo/eu_epa/attach/pdf/index-7.pdf   accessed November 4, 2017

「日EU・EPAにおける品目ごとの農林水産物への影響について（総括表）」(Written in Japanese) http://www.maff.go.jp/j/kanbo/eu_epa/attach/pdf/index-10.pdf   accessed November 4, 2017

EXPLANATORY NOTES FOR TRANSLATION

The following is a partial translation of the document entitled Impact of Japan-EU EPA on Agricultural, Forestry and Fishery Products by Commodities. Translated are evaluation on beef, pork, and dairy products, which the document expects to be affected in the long term, and a summary table. The three commodities are sequenced in the same order as the original document.

      This is the first time that the Japanese government published evaluation on the impact of Japan-EU Economic Partnership Agreement (JEEPA) on domestic products. The evaluation is based on an agreement in principle between Japan and EU on the main elements of JEEPA, which was reached on July 6, 2017. As such, the nature of the evaluation is tentative. The whole evaluation is qualitative and does not include quantitative estimation.

 

TRANSLATION

BEEF

Basic data

Price, production volume and import volume (Yen/kg, kilotons)

Tariff rates   38.5%

Summary of border measures

Based on the result of consultation with countries concerned in the Uruguay Round, provisional tariff rate is set at 38.5% which is lower than conventional tariff (50%).

Results of negotiation

 

Results of analysis

- Australia and the USA account for around 90% of import (530 kilotons). Import from EU was 985 kilotons even at its record high on fiscal 2015.

- Tariff elimination was avoided and long period for tariff reduction was acquired. Safeguard will be introduced.

- Among domestic beef (wagyu, crossbred, and dairy cattle), wagyu and crossbred cattle are differentiated from imported beef in terms of quality and price. Then the extent of competition with imported beef is expected to be small.

- Hence, rapid increase in import is not expected for the time being.

- On the other hand, EU accounts for about 10% of beef production volume in the world and the potential capacity to export is large. Besides, EU is strongly oriented toward expansion of export to Japan with entry into force of EPA. Therefore, in the long term and along with the reduction of tariff, there is a concern over decline in price of domestically produced beef as a whole with focus on dairy cattle competing with imported beef. Hence, as regards domestic production of beef cattle, strengthening measures for the sector to ensure advantage of domestic products such as reduction of production cost and improvement of quality need to be conducted, after necessary stocktaking in the light of examination of the past results. In addition, it is needed to give necessary consideration to farm income stabilization measures in light of the state of TPP.

PORK

Basic data

 

[Pork] Price, production volume and import volume (Yen/kg, kilotons)
Fiscal year	2012	2013	2014	2015	2016
Domestic price	629	713	847	771	754
International price	526	529	556	532	526
Domestic production                   volume	907	917	875	888	894
Import volume	760	744	816	826	877

 

[Ham and bacon] Price, production volume and import volume (Yen/kg, kilotons)
Fiscal year	2012	2013	2014	2015	2016
Domestic production volume	522	534	536	535	541
Import volume	241	254	229	228	225

 

Tariff rates (summary of border measures)

[Pork] (gate price system)

- When 524 Yen/kg is less than import price: 4.3%

- When 524 Yen/kg is greater than or equal to import price: difference between 546.23 Yen and import price

- When 64.53 Yen/kg is greater than or equal to import price: 482 Yen/kg

[Ham and bacon] (gate price system)

- When 897.59 Yen/kg is less than import price: 8.5%

- When 897.59 Yen/kg is greater than or equal to import price: 614.85 – 0.6 x import price (Yen/kg)

[Sausage]  - 10%

[Other prepared pork products]   - 20%

Results of negotiation

Results of analysis

- Long period for tariff reduction was acquired; gate price system and gate price will continue; safeguards will be introduced.

- Because gate price system will continue, “combination” import, which is prevailing under the existing system, is assumed to be kept.

- Given that demand for pork outside Japan would increase rapidly, competition for purchase with other pork importing countries can be intensified.

- Hence, rapid increase in import is not expected for the time being.

- On the other hand, in the long term and along with the reduction of specific tariff, there is a undeniable possibility that low-price parts will be partly imported without “combination”. This leads to a concern over a decline in price of domestically produced pork. Hence, as regards domestic pork farming, strengthening measures for the sector to ensure advantage of domestic products such as reduction of production cost and improvement of quality need to be conducted, after necessary stocktaking in the light of examination of the past results. In addition, it is needed to give necessary consideration to farm income stabilization measures in light of the state of TPP.

- As regards ham and bacon, long period for tariff reduction was acquired and safeguards will be introduced.

- Domestic prepared pork is mainly made of imported frozen pork. Hence, import of frozen pork can act as a substitute for imported prepared pork. Therefore effect on domestic pork is expected to be limited.

MILK AND DAIRY PRODUCTS

Basic data

Domestic production (FY 2016)	Main production regions and the share based on raw milk production of FY 2016
7,346 kilotons	Hokkaido 3,896 kilotons (54%)	Kanto 1,171 kilotons (16%)	Kyushu 640 kilotons (9%)

 

Price, production volume and import volume (Yen/kg, kilotons)

Fiscal Year	2012	2013	2014	2015	2016
Domestic price (skimmed milk powder)	591	600	619	650	650
Domestic price (butter)	1,150	1,178	1,208	1,268	1,254
International price (skimmed milk powder)	314	421	426	324	275
International price (butter)	280	470	464	434	384
Domestic raw milk production volume	7,607	7,447	7,331	7,407	7,346
Import volume of dairy products	4,195	4,057	4,425	4,633	4,553

Note: CIF price(Average price in ‘Trade of Statistics Japan’)

 

Tariff rates(Tariff-rate Quote)

 

Summary of border measures

-   Under the state trading system and tariff rate quota, the impact of imports on domestic demand is being mitigated.

-   Natural cheese destined as an ingredient for processed cheese (*1) is imported to Japan duty free up to 2.5 times the amount of the Japanese domestic natural cheese production used for processed cheese. This institutional framework creates the demand for Japanese natural cheese.

 

Results of negotiation

Results of analysis

-For butter and skimmed milk powder etc., the current state-trading system will be maintained. And additional tariff quota (non-governmental trade) will be introduced, although the quantity of the tariff quota is less than the recent additional import volume to current TRQ. Secondary duty rate will be maintained as current high level.

- For whey, tariff will be reduced, but not eliminated. Since the 11th year after enactment, the tariff will be maintained at 30 % of TPP's first year level. And special safeguard measure will be introduced against a surge in imports.

-For ‘soft cheese' (camembert, processed cheese etc.), the elimination of tariff was avoided, and single tariff quota will be introduced. For ripened hard cheese (cheddar, gouda, etc.), the long term for the elimination of tariff will be secured.

- As a result, for the time being, it looks like there will be no rapid increase of import, and thus the negative effect will be avoided, on the domestic supply and demand of dairy products including drinking milk.

- On the other hand, in the long period, the reduction and the elimination of tariff in whey and cheese could cause the decrease in the price level of domestic skimmed milk powder and butter. And thus the price of raw milk, which is destined for dairy products (exclusive fresh products) would decrease. Therefore, it is necessary that farm income stabilization measure should be reconsidered also in light of the state of TPP. Also after necessary stocktaking in the light of examination of the past result, the measure to strengthen the dairy sector should be enacted. At the same time, in order to make Japanese cheese more competitive, promotion is necessary to produce lower cost and higher quality of raw milk for cheese and for the whole dairy industry, and to produce lower cost. The dairy industry should be able to produce higher quality of branded cheese.