Great.
You know, we look at Japan and the potential there, and we know that Japan imports over half of the beef it consumes. Now, as a competitive situation, Australia and New Zealand have supplied somewhere between 90% and 95% of the beef that Japan imports. The beef imports in Japan really grew quite significantly during the 1990s, after they eliminated quantitative restrictions they had previously. As well, remember that in the nineties Japan was in a very positive economic situation, with very strong currency, and it really developed some western beef tastes. They moved away a lot from fish—I'm sorry, Mr. Keddy—but did start to import more beef. Maybe they didn't move away from fish quite so much, but they certainly did add more beef to their diet and looked more at the western cuts. That really peaked, with its apex around the year 2000.
If you look at the year 2000, Japan imported approximately 700,000 tonnes of beef. Their imports from Canada that year were in the neighbourhood of 28,000 tonnes, so we supplied about 4% of their imports. We really see this as an opportunity. If we get a preferential agreement with Japan, we could shift that balance somewhat.
I looked at some of the trade barriers we face. The chief one still is.... Well, in 2003, when we discovered a case of BSE in Canada, Japan closed that market, and then later that year it closed it to the United States as well. It was fully closed and remained closed until December of 2005, when they reopened it, but it was limited to beef from cattle under 21 months of age. That's the status we're still at. We would like Japan to fully implement the OIE standards for all beef from all cattle of all ages, but certainly we would welcome as an interim step raising the age from 21 months to 30 months.
In addition to that, the standard at the OIE for what we call SRM, specified risk materials, requires that most of those be removed from cattle over 30 months of age. There are a few SRMs there for cattle of all ages, but Japan requires the SRM removal regardless of the age of the animal. So even if it's a young veal calf you're shipping, they require that the full brain and spinal cord be removed, which is not consistent with the international codes, so we'd like to see some progress on those technical issues.
The tariff is significant. We face a 38.5% tariff. In addition to that, the 38.5% is what they refer to as their applied tariff, but they have a WTO binding of 50%, which means, if they choose to, they can raise the tariff from 38.5% up to 50% or anywhere in between. They have established a trigger point. Perhaps Jacques mentioned it, because I believe it applies to pork as well. Essentially, if the beef imports rise above a certain trigger point, which I believe for beef is a 17% increase in a similar period from the previous year, then they can raise the tariff from the 38.5% up to 50%. That certainly was a concern back in 2004-05, when, as you can imagine, our exports dropped from the peak in the early 2000s to nothing. As they started to increase again we were very worried about the trigger point. We did reach a temporary understanding that they base the trigger point on a historical period, but that's a temporary policy that they renew each year. So being able to deal with the tariff in a free trade agreement can also provide that certainty so that we will actually know what the rate of duty will be.
I think one last technical issue I would mention—and I've heard it with respect to some other agriculture commodities, but certainly in the case of beef—is that the Japanese tend to pursue policies that discourage importation of the more value-added products, the more processed products. One of the ways they do this with beef—it certainly used to be an issue, and it may well be, I haven't checked in a few years—they only approve the primary slaughter facilities for export to the Japanese market, and not companies that were only taking in beef products and processing them into something more value-added.
I'll conclude my opening statement by saying that we are supportive of this agreement and moving forward as quickly as we can to create these opportunities.
Thank you.