Japan, Australia Trade Agreement Could Make TPP Completion Harder

Japan, Australia Trade Agreement Could Make TPP Completion Harder

Australia approves some Japanese tariff exceptions on agricultural products under new FTA, groups say deal raises issues with TPP negotiations

Australia and Japan have completed negotiations on a Free Trade Agreement that at least one U.S. ag group says will have implications on agricultural trade and the ongoing discussions surrounding the Trans-Pacific Partnership.

In the new Japan-Australia FTA, announced Monday, Australia has agreed to submit to Japan's requests to exempt some agricultural products from tariff removal – an issue that U.S. ag groups have been fighting in separate negotiations with Japan on the Trans-Pacific Partnership.

Australia approves some Japanese tariff exceptions on agricultural products under new FTA, groups say deal raises issues with TPP negotiations

Australia, Japan, the U.S. and nine other countries are participating in TPP talks, where Japan has requested exemption from tariff elimination of certain "sensitive" products, like pork and beef, dairy, sugar, wheat and barley, and rice and starch.

Related: Ag Groups Hold Out on Japan's TPP Demands

Being unable to reach agreement on the TPP and continuing to fight against its requests, U.S. ag groups maintain that approval of exemptions for Japan would set a precedent that allows other countries to request similar special treatment.

Bob McCan, president of the National Cattlemen's Beef Association, said on Monday that Australia's new partnership with Japan will push the "high-standing ideals of TPP further out of reach for all countries involved."

He argues that Australia has undermined goals in the Trans-Pacific Partnership by approving Japan's requests in a separate FTA.

"The TPP has been referred to as a 21st century agreement, but this Bilateral Agreement is from the 20th century playbook and will not serve to foster open trade and certainly will not benefit consumers and producers globally," McCan said.

Boost for Australia
Despite the concern from U.S. interests, Australia's Minister for Trade and Investment Andrew Robb noted in a statement the benefits for his country.

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The agreement "will give Australia a head start over our competitors" in beef, cheese, horticulture and wine markets due to expanded access, he said.

It also presents an opportunity for Australian beef producers, as the tariff on frozen beef would be cut in half under the agreement – going from 38.5% to 19.5%. The tariff on fresh beef will be cut to 23.5% over 15 years.

Related: Groups Have Concerns, But Express Optimism Regarding TPP

Cheese, which Robb said is Australia's largest dairy export to Japan, will gain new duty-free access, while immediate tariff eliminations on fruit, vegetables and nuts and canned products like tomatoes, peaches and pears, fruit and vegetable juices will also be implemented.

TPP access by default
While a benefit to Australia, the National Pork Producers Council pointed out Australia's inability to achieve full tariff elimination on a number of important products, and a clause in the agreement that requires the Japanese to provide the same access to Australia that it provides to other nations.

Should the United States get better access to Japan in the TPP negotiations, NPPC said, Australia would get that same access.

"The Japanese need to eliminate tariffs on pork and other U.S. farm products," said NPPC President Dr. Howard Hill. "Japan is asking for special treatment in the form of exempting myriad tariff lines from tariff elimination, yet tariff elimination is the heart of an FTA."

Hill said U.S. farmers and ranchers likely would agree that if Japan is not ready to participate in a high-standard, 21st century agreement, which means elimination of tariffs, it needs to exit the negotiations.

"We support the efforts of [U.S. Trade] Ambassador Froman and our trade team to get the same result from Japan that we have gotten from every other U.S. FTA partner: elimination of virtually all tariffs," Hill said.

TPP negotiations continue this week as Froman begins talks with Japanese counterparts in Tokyo this week.

The Australia-Japan agreement follows on the heels of an Australian agreement with Korea, scheduled for official approval on Tuesday.

Related: Highlights of the Japan-Australia FTA

TAGS: Regulatory
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