After lengthy governmental negotiations concluded last year, the Japan-Australia Economic Partnership Agreement (JAEPA) was signed-off by Japanese Prime Minister Shinzo Abe and has now come into force. This Partnership is set to eliminate or reduce tariff rates on many of our key agricultural products destined for Japan, with the first round running from 12 January 2015 until 31 March 2015, and further tariff cuts set to take place annually on 1 April.
Similar to the back-to-back tariff cuts provided by the Korea-Australia Free Trade Agreement, the JAEPA is expected to deliver immediate benefits for exporters and significantly enhance their competitive position in the Japanese market – particularly against the US, whose farmers will continue to face higher tariff rates.
With Japan being the world’s third-largest economy and Australia’s second-largest trading partner, accounting for 11% of our total trade and 16% of our exports, a wide range of agribusinesses are set to benefit from the JAEPA.
Minister for Agriculture, Barnaby Joyce said “tariffs are notably reduced or eliminated on beef, livestock, dairy, seafood, wine and horticulture”. Under the Agreement, beef tariffs will be halved and lamb tariffs will be bound at zero, alongside commodities such as tuna and rock lobster.
Significant improvements will also be seen in market access, giving preference to pork and seafood, as well as through a number of new Australia-only quotas with lower tariffs such as dairy products and honey. The opportunities will then be expected to expand across a range of industries, including agriculture and processed foods, resources, manufacturing and services.
With exports to Japan worth $1.4 billion last year, Australian beef will be a major beneficiary of the JAEPA. Through heavy front-end loading, beef exporters have seen an immediate drop from 38.5% to 30.5% on the frozen beef tariff, which will be followed by a further 2% cut annually on 1 April over the next 15 years.
For chilled and fresh Australian beef exports into Japan, the tariff rate has dropped from 38% to 32.5%, which will also be followed by another 1% cut annually on 1 April right through until 2028.
For the beef industry alone, the JAEPA will allow for a reduction in tariffs of over $19 million between now and 31 March 2015.
The JAEPA sends a clear message to Japanese investors that Australia is an attractive investment destination. NAB general manager, Japan, Kohei Tsushima said that he “expects more Japanese companies to invest in upstream agribusiness in Australia” as a result of the JAEPA.
Australian businesses will be able to build strong relationships with Japanese investors and maintain a consistent strategy. This partnership also paves the way for greater trade reform with Japan via the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership negotiations.
JAEPA is the second of 3 trade agreements concluded by the Australian Government in the past year, suggesting that the Government is committed to providing Australian agriculture with increased trade opportunities.
If you have any queries about JAEPA, please contact our Agribusiness & Rural Industries team.
Alistair Salmon, Partner
T +61 2 8083 0467
Ron Eames, Partner
T: +61 7 3135 0629
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed above.