Australia-Japan Free Trade Agreement May Not Necessarily Mean Cheaper High-Tech Devices for Aussie Consumers, But Could Cause Lesser U.S. Beef Exports to Japan

By @ibtimesau on

One of the promises of the just signed free trade agreement between Australia and Japan is lower prices of high-tech products from Japan. However, trade experts warn that price reduction on mobile phones, TVs, cameras and computers may not happen at all, reports the Australian Financial Review.

Under the terms of the deal, the current 5 per cent tariff on electronic and other household goods imported from Japan would be removed immediately. But whether the Australian sales and marketing arms of the Japanese manufacturers would pass on the benefit of the zero tariff depends on the plan of the local retailers.

The agreement has 11 items covered. These are cameras, air conditioning units and parts, refrigerators, freezers and heat pumps, rechargeable batteries, TVs, vacuum cleaners, clothes dryers, dishwashing machines and small electric appliances.

The leading global electronic goods brands are predominantly Japanese such as Sony, Toshiba, Panasonic, Fujitsu, Epson, Sharp, Olympus and Hitachi.

IBRS technology adviser Guy Cranswick pointed out that previous trade agreements did not result in significant lower prices for Aussie consumers since rules of origin in the agreements allow the manufacturer to hike administrative costs.

He cited a 2012 inquiry into prices of technological devices and IBRS learned free trade agreements cannot change the fact that consumers pay more for many high-tech items. "We may see a drop in prices for electronics, but it may not be as much as consumers may expect for many reasons," Mr Cranswick said,

The trade agreement would only come to force after Australia and Japan have completed the domestic processes, including translation, verification and consideration of the texts by the Joint Standing Committee on Treaties of their parliaments, said the Department of Foreign Affairs and Trade.

But the deal, even if it would not reduce to zero the Japanese tariff on Australian beef would likely result in lesser beef imports by Japan from the U.S. Tariff on frozen Aussie beef would go down to 19.5 per cent and chilled beef to 23.5 per cent from the current 38.5 per cent, spread over 18 and 15 years, respectively.

The beef export market to Japan was $2.6 billion in 2013, according to the Marubeni Research Institute. Japan's Agriculture Ministry estimated the U.S. could lose up to 80 per cent of its beef sales to Japan unless Washington and Tokyo also agree to a similar accord that Japan and Australia inked on Monday.

Following the announcement of the free trade agreement, the Eastern Young Cattle Indicator of Australia went up 0.8 per cent to A$3.52 per kilogramme on Tuesday, the highest level since October 2012.

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