Japan parliament approves US trade deal

Japan parliament approves US trade deal

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The US-Japan trade deal could come into effect as early as January 1.

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OF Japan's two houses of parliament, the lower house is the more powerful and on Tuesday last week it approved the limited trade deal the United States and Japan signed agreement to back in September.

The upper house is now expected to complete Japan's side of the ratification process clearing the way for the deal to come into effect as early as January 1.

This is possible because the nature of the deal does not require US congressional ratification.

In consequence, the tariff rate on US beef to Japan will reduce from 38.5 per cent to 26.6pc, the same rate currently being paid by CP-TPP beef exporting nations Australia, Canada and New Zealand.

Naturally the US beef industry is delighted with regaining the competitiveness their country's president gave away when he withdrew the US from TPP just four days after coming to office in January 2017.

US beef exports are now expected to return to a strong growth trend in Japan.

Forecast for a full-year 2020 under the reduced tariff rates is for beef volume to reach 360,000 tonnes worth $US2.3 billion.

By 2025, analysts expect the US will have increased its share of the Japanese market to the point that its beef exports are worth $US2.8b.

But just how solid a deal this is remains to be seen.

At issue is the vagueness of the deal on tariff cuts on Japanese auto and auto parts and the uncertainty on whether President Donald Trump will drop threats to impose steep new tariffs on Japanese vehicle imports under 'Section 232' national security grounds.

It seems Japanese acceptance of the current deal hinged in large part on its own estimates of the value to its economy from elimination of US tariffs on Japanese autos and auto parts.

This in turn stemmed from belief that the US side had given assurance that the tariffs will be scrapped and that the only remaining issue is timing.

Similarly, Prime Minister Shinzo Abe publicly claimed he had obtained assurance from Mr Trump that he would not invoke new 'national-security' tariffs on Japanese vehicles.

But the language used by the US side does not confirm they are on the same page in terms of what the deal actually means.

US beef exports are now expected to return to a strong growth trend in Japan. Forecast for a full-year 2020 under the reduced tariff rates is for beef volume to reach 360,000 tonnes worth $US2.3 billion.

US beef exports are now expected to return to a strong growth trend in Japan. Forecast for a full-year 2020 under the reduced tariff rates is for beef volume to reach 360,000 tonnes worth $US2.3 billion.

On the issue of scrapping tariffs on Japanese autos, US Trade Representative Robert Lighthizer is reported to have said that cars are not included in the agreement and it is only due to Japan's ambition to discuss car tariffs in the future that the topic will be subject to further negotiations.

A similar qualifier was evident when Mr Lighthizer said Mr Trump doesn't intend to levy new tariffs on Japanese autos for the time being.

After the limited current deal is ratified and comes into effect, the two sides have four months to start talks on a second-phase agreement.

But there is a growing sense on the Japanese side that the US may not be wholly committed to the process of these second-phase talks at this time.

The degree to which the US will be engaged with Beijing will be a time-limiting factor for talks with Japan and that in combination with no clear indication at this point on what will be on the table questions just how much progress can be made before the US presidential elections in November 2020.

Mr Trump will not want another incomplete deal on his hands at election time.

He already has enough with the still unratified US-Mexico-Canada agreement, lack of any meaningful progress with the EU and an ongoing trade war with China.

If Mr Trump was to seek postponement of the second-phase talks, Japan might reluctantly acquiesce without threat to the agricultural tariff relief they have granted.

However, if he was to renew his threat of new tariffs on autos to appeal to his voters, Japan may well see this as a serious breach of trust and reason enough to revisit its position on agricultural tariffs.

Kills fill up as numbers flood in

ONLY a few weeks ago processors in Queensland were starting to wonder whether they would get to the end of the year without losing time as supply suddenly dwindled from a comfortable week or two in front to a day-by-day proposition.

Then just as quickly as it disappeared, back it came with numbers so strong that all the operators I spoke to this week now have their kills covered to year-end.

While most leave some room in order to continue supporting saleyards, it is obvious that this will not be enough for the big numbers now hitting the yards and unfortunately price looks certain to suffer.

More than 2500 cows in Dalby's 9000 head offering last week copped a 20-30c/kg drop and further heavy falls are expected this week.

Most locations in the state are now knocking cattle back, which may leave little choice other than to secure a kill as soon as possible in the New Year.

Latest advice on closure and re-open dates is as follows:

Townsville finishes on December 18 and hopes to open early in January as it did this year but that will depend on the weather.

Mackay, as advised last week, finishes December 19 and resumes January 10.

At Rockhampton, Lakes Creek finishes December 18 and reopens four weeks later on Friday, January 17, while Nerimbera finishes on December 17 and reopens on Monday, January 20.

Biloela finishes December 11 and comes back on Friday, January 10.

Dinmore finishes on December 19 and also comes back on Friday, January 10.

Beenleigh finishes its double-shift on December 18, continues for two weeks on single shift and then returns back to double shift.

Oakey finishes on December 19 and resumes January 3.

Singleton finishes on December 20 and comes back on January 13.

Tamworth, Wagga and Naracoorte all kill through, taking only gazetted public holidays.

Most recent grid quotes in southern/central Qld were 590c/kg for 4-tooth ox and 490-500c for heavy cows.

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