THE PRESS THURSDAY, APRIL 12, 1984. Whose beef for Japan?

Press, 12 April 1984, Page 20

THE PRESS THURSDAY, APRIL 12, 1984. Whose beef for Japan?

American success in persuading Japan to take more beef and citrus products is of considerable interest to New Zealand. Japan controls rigidly the amount of beef that it imports to protect domestic beef suppliers. The United States has persuaded Japan to take more high-quality beef, a category that usually means grain-fed beef. The United States is by far the largest supplier of grain-fed beef to Japan. What New Zealand will be watching with much interest is whether the increase in the size of the quota for high-quality beef will be at the expense of the quota for manufacturing beef, which generally means grass-fed beef. If this is the result, New Zealand exports of manufacturing beef to Japan are likely to be lower. The largest supplier of grass-fed beef to Japan is Australia, and Australia is showing more agitation about the increased American quota than is New Zealand. Both the United States and Australia, as major suppliers, negotiate with Japan under the General Agreement on Tariffs and Trade. Australia will begin negotiating soon with Japan and Japan’s intentions will be clearer then. Last year, New Zealand exported 7176 tonnes of beef to Japan, compared with 3645 tonnes in 1982, and 6148 tonnes in 1981. This volume can be set against Japan’s over-all imports of beef: 123,646 tonnes in 1981, 122,694 tonnes in 1982, and 143,521 tonnes in 1983.

The smallness of New Zealand’s part in Japan’s beef imports is obvious. Japan sets global quotas, not quotas for individual countries, but specifies the grade of beef within the quota. New Zealand has tried, at various times, to persuade Japan to distinguish between higher-grade grass-fed beef and lower-grade beef, but has not been successful. The result of Japan’s system of quotas and of calling tenders is that price is of primary relevance. The winner of the tender is usually the country with the lowest price. New Zealand holds meetings with Japan at

regular intervals on beef and dairy supplies. The next talks may be held in May or soon after. Before then, the talks between Japan and Australia may point the way to what New Zealand can achieve. Although New Zealand is a much smaller supplier of the Japanese market than is Australia, New Zealand should leave Japan and Australia in no doubt that New Zealand shares Australia’s concern that the increased quota for the United States should not be at the expense of Australia and New Zealand.

Part of the concern of the Japanese is their huge trade surplus with the United States. The United States is an immense market for Japan, and Japan does not want to see any more trade restrictions placed on imports from Japan by the United States. This constant concern will be heightened this year because it is an election year in the United States and the American trade deficit with Japan will become an election issue. New Zealand should not suffer because the Japanese may be defusing an American election issue that may react against Japan. It is too early to say whether the new agreement is an ill wind for beef exports; but other American efforts may blow New Zealand some good. Japan has apparently agreed to take more citrus products. Orange and grapefruit juice are of particular importance to the United States. If Japan has agreed to take more fruit pulp and juice, the access will not be confined to the United States alone. New Zealand should also be able to sell more fruit pulp and juice to Japan. In dealing with large traders, New Zealand does not have much clout. If the United States can lever Japan’s markets open a little and give everyone the opportunity to sell more, this is all to the good. The United States tends to think of New Zealand as a surrogate for American policies in parts of the Pacific; 'it will be a pleasant change if New Zealand can think of the United States as a surrogate negotiator.