Boerenbusiness analysis
EU pig export can make a difference in Japan
The way is open for European pork exporters to gain ground in Japan. Now that the trade agreement with the Asian country has been finalized since yesterday, the tariffs on pork will soon expire. This is to the chagrin of American exporters.
The European Commission and Japan reached a final agreement this week on a free trade agreement. According to the Commission, the deal with Japan is the most important bilateral trade agreement ever. It is rumored that the signatures will be put this summer. The agreement will officially come into effect at the beginning of 2019.
Pork will play a leading role in the deal, with the aim of gradually reducing the 20% levy on processed pork to zero. The levy on fresh pork will also be significantly reduced. According to Brussels, Japan is easing import tariffs on more than 90% of European agricultural exports. On the other hand, for example, Japanese cars can be shipped to Europe at lower rates. Administrative burden would also be reduced.
EU has already overtaken America
Japan is one of the main importers of pork on the world market. Both US and European sales rely heavily on the Japanese market. Japan imports approximately $5 billion worth of pork annually. Traditionally, American exporters have been the main suppliers. In recent years, the European export value has grown towards that of the US. In 2017, the European value of exported pork ($1,69 billion) itself exceeded the US value ($1,68 billion). Approximately €90 million of the European export value flowed to the Netherlands. Vion in particular has a strong position on the Japanese sales market.
With tariffs on European pork being reduced soon, US exporters fear losing market share. Partly because the US has recently withdrawn from the Trans-Pacific Partnership (TPP), a proposed free trade agreement between countries in the Americas, Oceania and Asia. President Trump would feel more for a 1 on 1 deal with Japan. However, this deal is still in its infancy. The chance that the Japanese/US agreement will also come into effect from 2019 is therefore nil.
Imports are increasing
This means that European pork exporters are likely to have a major competitive advantage compared to the US from 2019 onwards. This while American exporters are already having problems in China† There are therefore plenty of opportunities for Europe in Asia; once again because Japanese pork imports are on the rise and will continue to grow in the coming years. In its most recent forecast for 2018, the United States Department of Agriculture (USDA) projects a 2% growth to 1,5 million tons.
The European pig sector shipped over 2017 tons to Japan in 380.000, of which approximately 40.000 tons from the Netherlands. The US exported 390.000 tons of pork to Japan last year. In terms of volume, Europe is still lagging behind compared to the US. However, it is likely that this backlog will be turned into a lead in the coming years.
More privateers on the coast
Incidentally, the EU will probably not get the exclusive right in Japan. When the TPP is finalized, countries such as Canada and Mexico will also have easier access to Japan. These countries are, after America and the EU, the most important suppliers to provide Japanese consumers with pork. The TPP deal is not finalized yet. Last March, Japan took the initiative to revive TPP after the US had withdrawn 2 months earlier. The TPP negotiations are still ongoing. The EU can already start preparing for more flexible market access.
Wouter Job
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