Australian Beef, Cheese Favored in Trade Deals With Japan, Korea

Australian Prime Minister Tony Abbott sealed trade deals with Japan and South Korea as he seeks to boost exports of everything from beef to canned tomatoes and lower prices on cars and appliances for consumers.

Abbott was in Seoul today to complete the Korean pact, after almost five years of talks. Under the agreement, tariffs on Australian beef will be eliminated over 15 years, while levies on all Korean cars will be lifted within three years with those on some gasoline models dropped immediately, the South Korean Trade Ministry said in a statement.

“I believe Australia is a very precious partner that has closely cooperated on the international stage while sharing fundamental values, and also a traditional ally that fought” for South Korea during the 1950-53 Korean War, President Park Geun Hye told Abbott today, according to a pool report on the president’s website.

Abbott, 56, announced both trade pacts during his first North Asian trip since coming to power seven months ago. He is seeking to deepen trade and security ties with Japan and South Korea while not damaging relations with China, Australia’s biggest trading partner. Japan, China and South Korea buy more of Australia’s iron ore, coal and other exports than the rest of its customers combined.

Security Issues

The Australian premier met with Japanese Prime Minister Shinzo Abe yesterday and the day before to close the deal and bring an end to seven years of talks. The two also discussed security issues and Abbott became the first foreign leader to attend a meeting of Japan’s new National Security Council set up by Abe to better coordinate the country’s military and security apparatus.

“Japan and Australia will continue to cooperate toward the goal of peace and stability in the region and in the international community, as well as respect for the rule of law at sea and in the skies,” Abe told reporters last night after the meeting.

Abbott has touted Japan as Australia’s “closest friend in Asia” and has pledged to strengthen defense ties at a time when China is flexing its military muscle in the region and Sino-Japanese ties have frayed

“We have a deep, shared commitment to the universal aspirations of democracy, freedom and the rule of law,” Abbott said last night. “The relationship between Australia and Japan is about much more than economics and trade and growing wealthy together. It’s about respect, it’s about values. That’s why this is such a very strong partnership.”

Beef Tariffs

The terms of the Australia-Japan agreement will see tariffs on frozen Australian beef eventually cut to 19.5 percent from 38.5 percent and those on Japanese cars, household appliances and electronics abolished, according to a statement by Abbott’s office. Two-way trade in the 12 months to June 30 reached A$69.2 billion ($64.1 billion).

Akio Toyoda, chairman of the Japan Automobile Manufacturers Association, welcomed the trade deal after seven years of “tough negotiations.”

The pact is a “major windfall” for Australian beef, the country’s biggest agricultural export to Japan, currently worth A$1.4 billion, Abbott’s office said in a statement. Cheese exporters will gain “significant new duty-free access” and tariffs on canned products such as tomatoes, peaches and pears, plus fruit and vegetable juices, will be removed, according to the statement.

Tariffs on frozen Australian beef will be reduced to 19.5 percent 18 years after the deal is enacted, according to a statement from Japan’s agriculture ministry. The tariffs will be cut to 30.5 percent in the first year. Rice is excluded from the agreement, the ministry said in the statement.

TPP Talks

Abbott’s international push may be contributing to gains in the popularity of his government. Support for Abbott’s ruling coalition rose to 43 percent, the highest in six months, from 40 percent two weeks ago, according to a poll published today in the Australian newspaper.

Japanese Economy Minister Akira Amari said the Australian deal could spur progress on the U.S.-led Trans-Pacific Partnership to link the economies of 12 countries around the Pacific.

“With this, I hope TPP negotiations with the U.S. will accelerate,” Amari told reporters in Tokyo today.

Asked about a potential hit to Japan’s farmers, Amari said, “Japan’s agriculture is now regarded as a fresh growth industry and stands at a point where it needs to reform the way it thinks.”

The agreement with Australia will probably proceed before the TPP, leaving a gap in tariffs between Australian beef and U.S. beef, said Japan’s Ambassador to the TPP talks, Hiroshi Oe.

U.S. Beef

“That will be very difficult for the U.S. beef industry,” he said. “It would be good if that became an incentive for reaching an early agreement” on TPP.

Abbott is looking to balance longstanding diplomatic leanings toward Japan and South Korea against the need to safeguard economic ties with China, which has tripled trade with Australia in seven years. Twenty-five years ago Japan accounted for 23 percent of Australia’s two-way trade of merchandized goods, and China 2.3 percent; now Japan has a 13 percent share against China’s 27 percent.

Tensions over trade with China increased after the previous Labor government cited national interest concerns for its refusal to let Huawei Technologies Co., China’s largest phone-equipment maker, work on Australia’s A$30 billion broadband infrastructure project.

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