October 19, 2015

Video: How Japanese consumers will benefit from the TPP





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Transcript



"Hi this is .....a special on "How will Japanese Customers benefit from the Trans Pacific Partnership trade deal?"

It has been reported that a deal was struck on Monday the 5th of October in Atlanta in the USA by the twelve members of the Trans Pacific Partnership. The twelve members are the United States, Australia, Peru, Vietnam, Singapore, New Zealand, Chile, Brunei, Malaysia, Mexico, Canada and Japan. Now it has been estimated that these countries cover about 40 per cent of global output.

Now if we look at income, according to the Wall Street Journal on Friday the 9th of October , the forecast increase in real income by 20125 that Japan would experience has been estimated at two percent and a calculation by the Japanese government in 2013 shows that the TPP would boost Japan's real gross domestic product by about 3.2 trillion yen or US$6.7 billion in about ten years time. On the other hand, Japan's agricultural output by value would be expected to fall by 3 trillion yen and that is based on the fact that when tariffs on all the items are removed.

So lets get look specifically to what will Japanese consumers see at the supermarket. Now according to news reported by Kyodo on October 10th, 2015, Japan will eliminate tariffs on about half of the eight hundred and thirty four agricultural products that are subjected to duties.

So remaining tariffs from a number of items including oranges, tomato juice, ketchup, sausages, beef tongue, red salmon, cherries, apples and grapes.


Lets have a look a bit closer at some of these. Now, currently the tariffs on oranges in Japan are set at 32 per cent, this 32 per cent is set between December and March whereas a 16 per cent tariff is applied between June and November. 


According to reports this will be reduced in phases and eliminated in six years, that is 2021. For the June to November period in eight years, that is 2023 for the December to March periods.


If we look at tomato products such as ketchup and tomato juice, currently they have tariffs ranging from 17 to 29 per cent and these will be removed in the sixth year, that is 2021.


Beef tongue is also on the list and it currently has a 17.8 per cent duty and this will be removed in the eleventh year, that is 2026.


Fruit seems to be a highlight and quite important in this early stage as not all the information has been released yet but it seems that cherries which have a eight and a half per cent tariff, this tariff will be removed in the sixth year, that is 2021 and also apples they currently have a seventeen per cent tariff and this will be removed in the eleventh year, 2026.


Finally on fruits, grapes currently have up to a seventeen per cent tariff and this will be scrapped immediately.


Lets move on and look at rice. Under the agreement Japan will import more foreign rice, for example: from the USA they will increase their import of rice from 50,000 to 70,000 tonnes over a thirteen year period and for Australia an increase from 6,000 to 8400 tonnes over thirteen years. But from the consumers point of view it is unlikely that they will see a price reduction in rice when they visit the supermarket because of these changes.


Lets look a little bit broader and have a look at how the changes will impact the Japanese car industry.


In an article by Yuko Kubota and Eric Pfanner in the Wall Street Journal on Thursday the 5th of October 2015, their analysis shows that the Japanese car industry is hailing the TPP very highly because it would phase out the 2.5  per cent US duty on all imported cars over 25 years and this particularly benefits companies such as Toyota and Subaru. Now Japanese car makers have already shifted car production aggressively to foreign markets, for example, Vietnam and they have done this seeking to avoid tariffs, to protect themselves from currency fluctuations and to shorten their supply chains.


Now lets also look at another food, cheese. According to a report by Jared Lynch and Julianne Sprague in The Australian Financial Review on Wednesday the 7th of October , 2015, Australian farmers are quite excited because Australian cheese is very popular in Japan. Australian cheese when sent to Japan is blended with local product and in the past that has been at a ratio of two to one, now it was expected to be increased to three point five to one and to be tariff free within eleven years but it will now happen immediately once the TPP starts operating


In summary, from the Japanese consumers point of view we see the biggest impact is probably at the supermarket, for example: oranges, tomato juice, ketchup, sausages, beef tongue, red salmon, we have not got details on that yet, cherries, apples and grapes and over time we are going to see Australian cheese imported into Japan"











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