Japan is about to hit pork imports with tariffs.
But North American exporters hardly seem to be noticing, let alone complaining, about this obstacle to the world’s most lucrative pork market.
That’s because they have figured out a way to beat the Japanese tariffs, according to University of Missouri hog market analyst Ron Plain.
“It looks like the industry has learned how to circumvent this,” said Plain.
“It’s one of those things that was designed to protect the (Japanese hog) producer, but it hasn’t slowed the flow (of foreign pork) too much.”
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For the past three years Japan’s government has imposed tariffs on low-cost foreign pork after imports hit trigger levels. These tariffs are triggered when import levels over three months rise above the three-year average for the same period by at least 19 percent.
Reuters News Agency recently reported that Japanese traders believed that pork imports have surged this year because of the decline in beef and poultry consumption caused by consumer reaction and supply disruptions caused by BSE and avian influenza in Asia.
If the tariffs are triggered again, they will apply from the end of July for eight months, a Japanese government official told Reuters.
The tariffs target low-cost pork by forcing importers to pay a basement price for each shipping container of pork they receive. If the overall cost of a container falls below a set level, the tariff will be triggered.
High priced cuts of pork, such as tenderloin, are already well above that price if they are shipped in containers of nothing but tenderloins or other expensive cuts, so they have not been affected in past years.
But Plain said a container of pork trimmings would come underneath the basement price, and therefore trigger the tariffs.
North American packers have used their creativity to outfox the system. Most now ship pork to Japan in containers that have both high value and low value cuts of pork, so the overall price still comes in above the tariff trigger price. That way the low cost cuts can still be exported to Japan without being hit by a tariff.
Plain said American exports of pork were disrupted the first couple of years that the tariffs were imposed, but now that the processors know how to work around them “we don’t hear so much about them anymore.”
Packing plants in western North America, such as the Brandon Maple Leaf facility, are designed to ship fresh pork directly to Japan. That allows those companies to charge higher prices than shippers of frozen pork, such as the Europeans.
Because of that, European exporters will probably be more hurt by the tariffs, Plain said.
The tariffs are allowed under World Trade Organization rules because of their emergency status. They were introduced with the understanding that the rules would become less onerous each year, blocking less pork each year.
But Plain said the tariff-modifying process has proven to be slow and cumbersome, so each year they are being triggered.
North American hog processors have not complained much about the tariffs, Plain said, because they know how to work within the system.
“They wouldn’t want to lose the loopholes,” he said.
The tariffs have never been popular with Japanese importers and meat retailers, who have to increase the prices for some products and do a lot of paperwork to conform to the system.
