Absolutely. Currently the applied tariff in Japan, the tariff they apply to our products going into Japan, is 38%. But under the world trade rules, they could actually have a 50% tariff.
That 38% tariff will snap backāit will increase. The Government of Japan has the ability to increase that tariff if it sees substantial increases in imports from any particular country. If Canada's beef exports to Japan were to increase 20% next year, that is, within the next 12 months, Japan could actually significantly increase that applied tariff to protect its market.
When you're looking at the benefits of reducing tariffs and trade barriers, it's not only the applied tariff that's important; it's also the tariff rate that Japan could apply, because that creates business uncertainty. That's one of the key benefits from trade agreements, creating certainty in the market.
We're not an industry that has a short production cycle. If we're producing to meet a particular demand in the market and all of a sudden we see that market's tariff increase 20%, that's a really big hit across the entire production chain. It takes time to produce for that.
If we are able to have long-term certainty and stability in a market, it will significantly increase the business certainty for cow-calf producers like Ray, for feedlot operators, as well as for our processors. And there is significant value in creating that business certainty.