Abstract
AbstractBilateral trade agreements between Japan and major wine-exporting countries have resulted in tariff eliminations in Japan. This raises questions about how tariffs affect the competitiveness of wine-exporting countries. The generalized dynamic Rotterdam model was used in estimating Japanese wine demand by source. Estimates were then used to project the impact of tariffs on imports of Australian, Chilean, French, German, Italian, Spanish, and U.S. wine. Tariff reductions primarily benefit affected countries, with limited adverse effects on competing countries. The elimination of tariffs on U.S. wine should offset any losses from competing trade agreements.
Highlights
In 2018, Japan ranked eighth among bottled wine-importing countries and was the third leading market for U.S bottled wine exports ($68 million) (United Nations 2019; U.S Department of Agriculture 2019)
The impact of Japan-Australia agreement reflects the fact that Japanese importers are highly sensitive to Australian wine prices
When the tariff on Australia is eliminated, Japanese imports of Australian wine are projected at $31 million, which is an increase of $1.8 million and 6.1 percent when compared to the baseline
Summary
In addition to the United States, major wine exporters to Japan include Australia, Chile, France, Germany, Italy, and Spain These countries have bilateral trade agreements with Japan and face zero (or significantly lower) tariffs (Zeller and Cole 2014; Paulson and Kurai 2018). Lee, Seale, and Jierwiriyapant (1990) examined Japanese import demand for citrus and how more liberal trade could impact U.S citrus exports relative to exports from competing countries like Brazil and Israel. This analysis builds upon extensive literature that focuses on global wine trade and source-based competition. The primary takeaway from past research is that while tariffs are important to global wine trade, they may be subordinate to other determining factors
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