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The beef industry of Alberta, Canada is confronted with huge tariff hikes imposed by the Japanese government.
According to reports, Japan passed a new law which seeks to impose temporary tariffs at the rate of 50 percent on imports of frozen beef from Canada and other countries, including the United States, until March of next year. This is a significant increase in tariff rates which were formerly imposed at 38.5 percent.
According to Dennis Laycraft, executive vice president of the Canadian Cattlemen’s Association, Japan has been the largest export market for the US for the past few years when it comes to beef products. Since the tariff hike will make an adverse impact on US prices, Canadian prices are likewise directly affected since these prices are essentially set of against the US market.
Laycraft further says that the adverse consequences of tariff hikes would have been averted if Canada had a free trade agreement with Japan.
Japan has recently forged free trade agreements with several countries such as Australia, Chile, and Mexico. The bilateral agreements ensure that notwithstanding any increase in the tariff rates, the parties in the agreement will be exempted from this snapback.
"I think it really underlines how important it is to get more certainty through agreements, like the Trans-Pacific Partnership," Laycraft added. The Trans-Pacific Partnership is a complex trade pact between 12 countries that is aimed to deepen economic ties between these nations, decrease tariffs, and encourage trade to boost economic growth.
According to Ted Haney, president of Canadian Rocky Mountain Beef, Japan has a very lucrative market for beef products because of its high demands for a half a dozen cuts that beef sectors from other countries markets don't pay the same level for. Haney remains hopeful that he will be able to export more beef products to Japan, although these plans should be put on hold momentarily due to the massive tariff hikes.
The Japanese government says that the decision to impose stricter tariff rates was for the protection of its local beef industry from a stiffer foreign competition. This is following the official reports that reveal that the volume of the imported frozen beef from US has already exceeded the quota set by the World Trade Organization rules.