Free Trade Deal Struck with Japan

April 11th, 2014

Japan is Australia's second largest trading partner, and the biggest export market for Australian beef and dairy products. ; The beef industry is the big winner from this deal, with the current 38.5 percent tariff on frozen beef halved to 19.5 per cent over 18 years, with major reductions in the first year. ; Other agricultural industries that will benefit from the deal include dairy, fruit and vegetables, sugar, wine, and seafood.

According to Lachie Hart, chairman of the Australian beef industry's free trade taskforce, the deal will be worth $5.5 billion to the beef industry over 20 years. ; "This will create opportunities for increased Australian beef sales into Japan and improve the affordability of beef to Japanese consumers", said Hart, adding "Pleasingly, the tariff reductions on both frozen and chilled Australian beef have been 'front loaded', meaning that major reductions will occur in the first few years of the agreement."

The duty-free quota for cheese will be also be boosted, from the current level of 27,000 tonnes per year to 47,000 tonnes annually. ; Cheese is Australia's single largest dairy export to Japan, so this deal will be significant for the entire dairy industry. ; Tariffs on canned tomatoes, peaches, and pears from Australia will be eliminated, as will tariffs on seafood exports and fish oils. ; Australia's sugar industry will also benefit from tariff elimination, as will wool, cotton, lamb, and beer. Tariffs will also be greatly reduced for many other products, including wine, vegetable oils, and canola oils.

Despite the many advantages for Australian exporters, however, the Japanese may be the biggest winners from this deal. ; In a statement to the ABC, Dr Andy Stoeckel, an economist specialising in trade and agriculture, said "Let me emphasise, the main gainers here from any of those tariff reductions are to the Japanese themselves. They bring down their cost of living and they get access to Australia's high quality beef, access to Australia's high quality wines and so forth. Well then they are far better off."

From a Japanese perspective, exporters will see Australian tariffs lowered on electronics, whitegoods, and cars. ; Australian consumers are likely to experience lowered prices on Japanese products as a result, with the price of Japanese cars estimated to drop $1500 on average and the price of some consumer electronics also likely to decrease. ; More importantly, however, this deal is an important structural reform for Japan, and as the third biggest economy in the world, a healthy Japan is good for regional stability and great for Australia.