Beef producers are starting the year with plenty to celebrate when it comes to exports, including better access to Japanese and European markets.
New U.S. trade agreements with Japan and the EU went into effect Jan. 1.
The agreement with Japan lowers the tariff rate on U.S. beef from 38.5% to 26.6%, putting the U.S. on par with its international competitors, and it will continue to decline to 9%.
“This is a great opportunity for our industry because Japan is our biggest export market,” Kent Bacus, director of international trade and market access for National Cattlemen’s Beef Association, said in the latest "Beltway Beef" podcast.
Japan accounts for about 25% of U.S. beef export sales at roughly $2 billion annually, and NCBA expects big gains with the lower tariff.
The new agreement with the EU, the most protectionist market in the world, is also a big win, he said.
“It’s just a really tough nut to crack,” he said.
U.S. beef faces high tariffs, small quotas and a host of non-tariff trade barriers in the EU, such as bans on the use of hormones and beta agonists, he said.
The agreement provides a U.S. specific, duty-free quota of 35,000 metric tons annually by year seven.
“This is a big, big opportunity for us,” he said.
The quota is limited to beef from non-hormone treated cattle, but it's a great first step, he said.
NCBA will continue to fight for more access to European markets. EU politicians might not want U.S. beef, but European consumers do, he said.
Right now, it’s more of a niche market. But NCBA wants to see it continue to grow by building trust with European consumers and hopefully getting the political tides to turn, he said.
In addition to the two new agreements, he tallied the industry’s successes in foreign markets over the past decade.
U.S. beef exports went from $3 billion in 2009 to more than $8 billion in 2018, and annual sales are projected to top $10 billion in the next couple of years, he said.
“We’ve seen a tremendous growth in the overall value,” he said.
But the big barriers have always been tariffs and all the non-tariff restrictions, he said.
The U.S. has faced age-based restrictions tied to bovine spongiform encephalopathy and restrictions associated with hormones, beta agonists, antibiotics and traceability, he said.
NCBA and industry partners have been focused on trying to eliminate as many barriers as possible, he said.
Those efforts have eliminated a 40% tariff in South Korea, an 80% tariff in Colombia and a 30% tariff in Panama, he said.
The U.S. has now gained some duty-free access in the EU, and Japan’s tariff will soon be reduced to 9%. NCBA is hopeful for good news in China, where U.S. beef faces a tariff upwards of 47%, he said.
The industry also gained new access throughout North Africa, the Middle East and Southeast Asia and eliminated age restrictions tied to BSE.
“We still have a lot of barriers to overcome, but we’ve come so far in the last 10 years,” he said.