Japan imposes a relatively modest 4.3 percent tariff on imported pork but has a separate system, known as the “gate price,” that more fundamentally controls what U.S. pork farmers can send there.
The “gate” amounts to what experts say is a roughly 25 percent additional duty on U.S. pork exports to Japan; it effectively keeps out lower-priced cuts.
The U.S. pork industry, which stretches from North Carolina to the upper Midwest, wants the tariff and the “gate” gone as part of a big trade deal nearing completion. Any deal on pork would likely keep prices higher for U.S. consumers as a result of the increased demand abroad.
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Pork has become such an important point in trade talks that, for the moment, the entire Trans-Pacific Partnership could hinge on swine and a few other key agriculture products, said Darci Vetter, a U.S. trade representative who is the lead negotiator on agriculture products.
‘Delicate’ trade talks
Vetter said in a recent interview that the talks are “delicate,” and pork is “one of the most difficult parts of our negotiation.”
She said the U.S. will not make a TPP deal without breaking down Japan’s significant barriers on pork, but she stopped short of saying all protections would go away. Japan has so far been reluctant to make any change.
“We cannot conclude an agreement, or would not conclude an agreement, that did not include improvements on market access for pork,” Vetter said.
Because of the secrecy, many TPP details are unknown. Some U.S. lawmakers, who must approve any deal, have expressed concern about other provisions covered in the deal, such as changes on technology and copyright protections. Japan wants to eliminate U.S. tariffs on auto parts it sends to the U.S.
U.S. Agriculture Secretary Tom Vilsack said opening markets is “extremely important” – and agreed breaking down barriers to allow more U.S. pork into Japan is essential to any agreement.
“If you have barriers and protections in countries, then it isn’t particularly fair,” he said in a September interview.
Japan’s parliament, the Diet, has the final say on its side of the deal; it has adopted a resolution maintaining current protections on pork, rice, wheat, beef, dairy and sugar, which are viewed as “sacred” sectors.
‘We will open up markets’
The unknown in this is Japan’s prime minister, Shinzo Abe. Abe took control in late 2012 promising significant reforms, including in agriculture, to jump-start Japan’s economy after years of deflation.
He followed through by adding Japan to the TPP talks last year and has said repeatedly he’d push through tough choices and take on “entrenched” special interests in his country.
“We will open up the country and open up Japan’s markets,” Abe said last summer in London. “This is a philosophy that has coursed through my veins consistently ever since I entered politics.”
As summer turned to fall, there was little movement. Masaru Shizawa, the head of Japan’s powerful pork association, said pork interests in Japan will prevail. Political pressure should keep the Diet’s resolution in place, he said.
“Prime Minister Abe has to keep this decision, otherwise his political power is going to be in danger,” Shizawa said. “The government promised it to the people, so they cannot easily break this promise.”
Last month, finance ministers confirmed Japan had fallen into recession. It led to this week’s parliamentary election, and more promises from Abe to push through reforms. Cabinet-level ministers have signaled recently that some softening of Japan’s position on the “sacred” products may be necessary.
Staff writer Jay Price contributed.