1988 Japanese Beef Market Access Agreement: Forecast Simulation Analysis

This paper uses dynamic simulation analysis to consider the likely consequences of the 1988 Japanese Beef Market Access Agreement (BMAA) on the Japanese livestock industry and beef imports. Using a simultaneous equations, econometric model of Japanese livestock markets, a forecast baseline up to 1997 was first established, asswning that the Japanese beef import quota continues to increase by 9,000 tons annually as under the 1984 agreement The restrictions of the new agreement were then imposed on the model. The results lead to a number of conclusions. Beef imports will increase to the new quota level in the first three years and continue increasing at about the same rate thereafter. The shift from the import quota to the import tariff in 1991 will have little effect on imports or prices. The US share of increasing Japanese beef imports will increase at the expense of Australia and New 7.ealand. The effects of the BMAA on the Japanese beef industry will be significant but less than devastating. The pigmeat industry will also be affected. The chicken and fish industries will be little affected. Finally, the degree of responsiveness of Japanese cattle prcxiucers to the expected beef price decline will significantly affect the outcome.