Beef And Apple Exports To Japan

Apples and Beef: and in-depth look at U.S. exports to Japan

Krista Cortellini

Ahmad Elarbi

Jacqueline Garris

Diana Hamel

John Michaels

INTRODUCTION

Agriculture is one of the most disputed issues in the global economy, dealing with everything ranging from protectionism to health standards. In the current round of the WTO, the Doha round, agriculture is one of the most prominent features on the development agenda. Although much of the agenda deals with the developing world, there are issues disputed between developed countries as well. The U.S. and Japan have had a strong, but relatively new, trading partnership, including agricultural products. There have been a number of issues surrounding agriculture, some minor, and some requiring WTO involvement. Two of the most heavily disputed products are U.S. products are U.S. apples and U.S. beef exports to Japan. Aside from the market issues, there are numerous non-market barriers in Japan that have created a very complicated and heated situation for U.S. exporters. The following paper will analyze the non-market barriers and their resolutions for U.S. exporters of apples and beef into the Japanese market. The paper is divided into two sections - it first discusses apples and then beef. Each section includes an introduction to the problems specific to the product, some background information on the issue, a description of the non-market barriers and reasons for implementing them, the response to the non-market barriers, the involvement of the WTO or other organizations, and finally, the resolution of the problem and the current situation. This paper illustrates how and why the Japanese government restricted U.S. apple and beef imports, and also how the U.S. exporters worked with the government as well as the WTO and other organizations to achieve more exporting privileges.

I. APPLES

Introduction

For many years the United States has been trying to export apples to the high-income Japanese market but has faced many issues in doing so. The U.S. is the second largest exporter in the world, following China and would like to expand even further (Resolution of the U.S.-Japan Apple Dispute: New Opportunities for Trade). Unfortunately, some countries, like Japan have strict barriers to entry for the apple producers due primarily to the insects or apple worm and apple maggot that may be transferred with the fruit. Some other problems include, but are not limited to, pesticide and fumigation problems. Japan is the number one US agricultural export market, yet they refuse to acknowledge pest-free regions in the US and additional varieties of horticultural products require extensive and redundant testing (Resolution of the U.S.-Japan Apple Dispute: New Opportunities for Trade).

With less apple consumption in its country compared to the United States and even more so compared to European Nations, Japan feared its country's own apple industry would fall victim to the much cheaper U.S. apple imports Because Japanese apple production is so labor intensive (20% of labor is simply removing leaves from apple trees so they receive appropriate sunlight to ripen better), they became fearful that the United States would be able to completely take over their market share. This is why they put so many regulations on apples from the United States. It was not until the year 1994 that Japan really began to import apples from foreign countries, minus North and South Korea and New Zealand for a very small amount.

Background

Japan requires that their apple imports have been through intense phytosanitary protocol and processes, which is very timely in addition to being very costly. Although these phytosanitary policies and regulations have been constantly changing and adjusting over the last few years, they are determined by the collective efforts of various interest groups: consumers, producers, scientists, policy makers, and trading partners (National Food and Agriculture Policy Project). In an effort to contain the spread and/or introduction of exogenous pathogens, phytosanitary regulations have the potential to impact the United States' agricultural sector through policy-induced constraints on international trade.

In addition to the strict protocol that Japan has put in place, they also use additional techniques that require the fruit growers, or the U.S. exports control to clearly and precisely label all shipping containers with information such as; address of origin, "additional declarations," stating that the product was inspected or meets standard control policies, or that the product was treated with certain pesticides. Also, according to the Japanese government, representatives of U.S. health food policy organizations have to inspect each tree in the orchard three times for signs of the insects, worms, or maggots--at blossom time, when the fruit was 3 centimeters in size, and just prior to harvest in the presence of a Japanese inspector. In the event of hail, the orchard had to be re-inspected because conditions might increase the risks of certain insects. Furthermore, each orchard block has to have a 500-meter buffer zone on all sides, which involved a substantial area, to ensure that no harmful insects even have the chance to affect the crop (Resolution of the U.S.-Japan Apple Dispute: New Opportunities for Trade). Japan is the only country that requires methyl bromide fumigation of U.S. apples (Japan-Measures Affecting the Importation of Apples). It also requires apples to be fumigated in field bins instead of in packed cartons. This requirement raises costs because all apples from an orchard must be fumigated whether or not they meet the quality and size standards for the Japanese market. In addition to these policies, Japan only lets certain states where the risk is lower for problems export apples (Japan-Measures Affecting the Importation of Apples).. These barriers cause a reduction in the volume of trade, trade distortions and may create a retaliatory atmosphere.

Some U.S. producers believe that following this protocol may slow down their export rate as well as even possibly causing them to lose money. The United States went to argue that the Japanese apple trade ban did not follow or uphold to their obligations with the World Trade Organization stating that the ban was not supported by scientific evidence, was more trade restrictive than required, and was nontransparent (National Food and Agriculture Policy Project).