Japan OKs Ending Quotas on U.S. Beef and Oranges

U.S. Trade Representative Clayton K. Yeutter announced here today that Japan has agreed to remove its quotas on the imports of beef and oranges in three years and on orange juice in four years.

In a news conference, Yeutter called the agreement “a landmark in U.S.-Japan relations” and predicted that when the quotas are lifted, an extra $1-billion worth of American beef and citrus products will be exported to Japan.

The agreement, hammered out in a rare daylong Sunday bargaining session with Agricultural Minister Takashi Sato, ends one of the most acerbic and emotional trade disputes that have erupted between the two countries in recent years.

Twice this year, in March and again in April, negotiations between Yeutter and Sato ended in failure. In May, the United States appealed to the General Agreement on Tariffs and Trade (GATT) to outlaw the Japanese quotas on both beef and citrus products and permit American trade retaliation against them.

Yeutter said today that the United States would withdraw its GATT appeals and drop investigation of an unfair trade complaint against citrus restrictions brought against Japan by the Florida citrus industry, once official documents finalizing today’s accord are signed.

For Japan, too, the accord marked a major departure from years of steadfast opposition to liberalization of its farm markets. Not once, for example, in five years in power, did former Prime Minister Yasuhiro Nakasone, who stepped down last November, express any willingness even to discuss agricultural liberalization.

Overriding vociferous opposition from Japanese farmers, who fear that opening markets to beef and oranges will provide a wedge for the United States to demand an eventual lifting of Japan’s ban on rice imports, Prime Minister Noboru Takeshita told President Reagan in a meeting they in London on June 3 that he would try to work out an agreement by the time the two leaders were to meet at the Toronto summit, which began Sunday.

They are scheduled to hold a private meeting later today in Toronto.

‘Long, Hard Negotiation’

“This was a long, hard, difficult negotiation which has consumed a great deal of time and effort on the part of both governments,” Yeutter said. From a “huge gap” that separated the two sides at the beginning, “we’ve come a long way in the last several months.”

He said he believes the United States had “moved farther from our opening position than has the government of Japan” but said the result was “an acceptable solution” for both sides.

“I believe Prime Minister Takeshita can defend this agreement to the Japanese public and even to the Japanese farming community,” he added.

Under the agreement, which Yeutter hammered out with Agricultural Minister Sato, Japan is to phase out its quotas on beef imports over three fiscal years through March 31, 1991--but allow an expansion of 60,000 tons each year, beginning this year. That provision would raise imports from 214,000 tons last year to 394,000 tons in fiscal 1990.

“We expect beef exports to double to more than $1 billion per year” by 1990, Yeutter said in a fact sheet handed to reporters.

In addition, beef imports handled by the governmental Livestock Import Promotion Corp., which specifies which cuts may be imported, will be reduced from the current level of 90% of all imports to only 40% in fiscal 1990, allowing beef sellers to deal directly with purchasers. After April 1, 1991, the corporation will no longer handle imported beef, Yeutter said.

After quotas are lifted, Japan will raise its tariffs on beef from the current 25% rate to 70% in fiscal 1991, 60% in fiscal 1992 and 50% in fiscal 1993. Negotiations to lower the 50% rate will be conducted as part of the Uruguay Round of multinational trade negotiations, Yeutter said.

Philip Seng, Asia director of the U.S. Meat Export Assn., praised the agreement as offering an unprecedented opportunity to the American cattle industry.

Although tariffs will be raised on imports, he pointed out that price manipulation and other surcharges now imposed by the Livestock Promotion Corp. often triple the costs of imported beef. In addition, the provision for 60,000-ton annual increases through fiscal 1990 far exceeds the 6,900-ton annual increase Japan permitted four years ago, when the last bilateral agreement on beef and trade was reached. It expired March 31.

U.S. Drops Demand

The United States on Sunday night dropped its demand that Japan agree to retain a right to implement emergency controls on beef imports for no longer than two years after the quotas are lifted. Instead, Japan will be allowed to impose temporary extra tariffs of up to 25% for the remainder of the fiscal year in which such an increase occurs if imports rise by more than 20% above the previous year’s level.

Japan, however, will not be permitted to impose new quotas as an emergency measure, Yeutter said.

An Agricultural Ministry official told Japanese reporters that the high level of imports at which Japan would be permitted to evoke such an emergency measure meant that it amounted to “no more than a fig leaf” of protection.

Yeutter predicted exports of fresh oranges will increase by more than 50% in volume and $25 million in value as Japan raises its import quotas by 22,000 metric tons a year--twice the rate of increase permitted in the last four years--to 192,000 tons a year in fiscal 1990, which ends March 31, 1991. After that, imports will be freed of quota restraints but subjected to the present tariff rates of 40% during the mikan (mandarin orange) harvest season and 20% at other times.

Imports of orange juice concentrate will rise in stages from 8,500 metric tons last year to 40,000 tons in fiscal 1991, after which quotas will be eliminated.

Yeutter offered no estimate for gains in American exports in juice sales but said that U.S. producers would be able to compete in a Japanese import market worth about $50 million a year beginning April 1, 1992.

A requirement that “single-strength,” or bottled, orange juice be blended with mikan juice will be dropped and quantities of imports of pure juice, now essentially banned, will be raised gradually to 27,000 kiloliters in fiscal 1990. Quotas would then be dropped from April 1, 1991.

As compensation for the American agreement to allow a period of adjustment to Japan to prepare for lifting its quotas, Japan agreed to reduce tariffs on 12 other agricultural products. These included grapefruit, lemons, frozen peaches and pears, pistachios, macadamia nuts, pecans, walnuts, bulk pet food, pet food in retail packs, beef jerky, sausage and pork and beans.

On grapefruit, the tariff will be cut to 15% from 25% in season and to 10% from 15% in the off-season. On lemons, a duty of 5% will be eliminated.

Yeutter declared that the United States intended to watch carefully whether Japan carried out provisions of the agreement.