WINNIPEG – For the second time in less than a year, Japan is shutting its doors to pork imports.
Pork industry officials expect that on July 1 Japan will impose a so-called safeguard tariff of 25 percent of the value of the imported product. A similar tariff was in effect from last November until March 31.
Jim Morris, president of Canada Pork International, a marketing agency for marketing boards and packers, was critical last week of the anticipated Japanese action.
“Because of the irresponsible use of this tariff mechanism that Japan gained under the GATT, they’ve really distorted normal trade flows,” he said in an interview.
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Many importers stopped buying in early June in anticipation of the tariff, which is expected to be in place until March 31, 1997.
Morris said the trade barrier also has an impact on markets. “Part of the strength in hog prices early this year was because of strong Japanese buying. Now the drop in the market is in good part due to the lack of Japanese buying.”
He estimated the tariff has depressed the price of pork loins by about $1 per kilogram, which works out to about $20 a hog.
Canadian government officials, along with their counterparts from the U.S. and European Union, have lobbied in vain with the Japanese government not to impose the levy.
Under the new world trading rules negotiated in the last round of the General Agreement on Tariffs and Trade, Japan and other countries gained the right to impose a safeguard tariff if imports of a particular product exceed the previous three-year average by at least 19 percent.
While the intent of the provision may have been to stabilize international trade and provide some lingering protection, Morris said it’s being misused by the Japanese, who are now only about 50 percent self-sufficient in pork.
Japanese pork production has been dropping by five to 10 percent per year. If that shortfall is made up with imports, that in itself is almost enough to trigger the safeguard tariff.
When the tariff was in effect from Nov. 1, 1995 to March 31, 1996 many importers bought meat but held it back so the purchase could be officially imported after the tariff came off.
As a result, there was a huge jump in recorded exports in April and May, allowing the Japanese to re-impose the safeguard tariff July 1.
Morris said it’s hard to predict what buyers will do. They may start buying later this year and hold off importing the sales until after March 31, which would mean a repeat performance this time next year.
Canadian exporters will try to move some of the product normally destined for Japan to the U.S. instead, but Morris said prices will be lower.
Japan last year took $226.3 million worth of Canadian pork, 23.5 percent of Canada’s pork exports.
