Safeguard Measures and U.S. Beef Exports to Japan

For the last five years (2016-2020), beef and beef products have been a top-five U.S. agricultural export. In 2019, for instance, U.S. beef exports were valued at $8.1 billion, third behind soybeans ($18.7 billion) and tree nuts ($9.1 billion).1 Japan is the most important foreign market for U.S. beef (around $2 billion annually), accounting for around 25 percent of total U.S. exports (See Figure 1) (U.S. Department of Agriculture, 2021a). Thus, the U.S. beef sector is concerned when Japanese policies change in favor of competing countries, resulting in a disadvantage for U.S. beef exports. This was actually an issue when the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force in December 2018.2 The CPTPP countries that export beef to Japan (e.g., Australia, Canada, New Zealand and Mexico) faced immediate tariff reductions and a tariff phase-down from about 40 percent to nine percent over a 15-year period (Muhammad and Griffith, 2018). Fortunately, the U.S. was able to negotiate similar tariff reductions for U.S. beef in the U.S.-Japan Trade Agreement (USJTA), which entered into force January 2020. However, unlike beef from CPTPP countries, U.S. beef products face more restrictive safeguard measures in Japan (Imaizumi, 2021). Safeguard measures are used to limit excessive import growth by allowing governments to increase tariffs on a product when imports exceed a certain level during a specified period. The World Trade Organization (WTO) and agreements like CPTPP and USJTA allow the Japanese government to increase tariffs on beef when imports exceed a certain volume during a specified period. This specified volume is often referred to as a safeguard trigger. For instance, if Japan’s annual beef imports from CPTPP countries exceeded 601,800 metric tons (MT) (around 1,327 million pounds) from April 2019–March 2020, the Japanese government could have enforced a higher tariff to limit beef imports from CPTPP countries (Imaizumi, 2018).3 Japan’s safeguard trigger for U.S. beef negotiated under USJTA is currently 242,000 MT (around 534 million pounds), which is significantly lower than the CPTPP safeguard trigger. While the relatively higher safeguard trigger could be due to CPTPP including multiple countries and USJTA only including the U.S., Japan essentially imports beef from two countries, the U.S. and Australia. Imports from other CPTPP countries are significantly smaller by comparison. Thus, the more generous CPTPP safeguard trigger is predominantly applied to Australian beef, whereas U.S. beef is facing a significantly more restrictive safeguard trigger. To put this in context, U.S. beef exports to Japan exceeded 242,000 MT the last five years (U.S. Department of Agriculture, 2021a). Given this fact, it was no surprise when the Japanese government announced in March 2021 that imports of U.S. beef from April 2020 to March 2021 reached 242,229 MT, exceeding the safeguard trigger, and that tariffs on U.S. beef would temporarily increase from their current level (25.8 percent) to 38.5 percent for a 30-day period (Imaizumi, 2021). The goal of this report is to examine how Japan’s beef safeguard measures could impact the competitiveness of U.S. beef, vis-à-vis beef from competing countries like Australia. While there is some evidence that Japanese consumers do not consider U.S. beef and Australian beef to be perfect substitutes and have different preferences based on product attributes (e.g., U.S. grain-fed beef versus Australian grass-fed beef), prior research suggests that price competition is still important and that tariffs could affect the competitiveness of U.S. beef in Japan, resulting in less imports of U.S. beef and increased imports of Australian beef (Muhammad et al., 2018). In this report, we provide background on the U.S. beef sector and Japanese beef imports, details on Japan’s beef tariffs and safeguard measures in the CPTPP and USJTA, and lastly, we present findings on how temporary tariff increases due to safeguard measures impacts U.S. beef exports relative to other exporting countries in the Japanese market