Chile cements its position in Japan one year after the CPTPP

In a year marked by global challenges, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has become a commercial asset for Chilean producers. Since its entry into force last February, Chile has seen a boost in exports, especially in the pork industry.

The CPTPP, the third largest global free trade agreement, covers 11 Asia-Pacific countries and has become a tool to reduce tariff barriers and expedite exports. With improvements in labor, gender, and environmental issues, the treaty represents both economic progress and a commitment to sustainable and responsible business practices, and Chile is the tenth country to join the treaty.

The Chilean pork sector, and particularly exports, has been one of its main beneficiaries. With the CPTPP, Chile enjoys a preferential tariff in Japan, leveling the field with competitors that already enjoyed that advantage. This is key considering that Chile is the world’s fifth largest pork exporter according to the USDA, and Japan’s sixth main supplier of this protein.

“Japan is one of the CPTPP’s members with the highest tariff advantages, with more than 1,000 lines that include about 89% of agricultural, fishery, and aquaculture products. Besides pork, honey will enter Japan tariff-free in 2025. The same goes for tangerines and tomato sauce,” explained Nury Disegni, Chile’s Commercial and Agricultural Attaché in Japan.

2023 was challenging due to high production costs and geopolitical uncertainty. However, the Chilean pork industry overcame these obstacles thanks to its privileged disease-free health status and the most extensive free trade network in the world, which has been further strengthened with the CPTPP.

It should be noted that Japan is the second largest destination for Chilean pork exports and the results speak for themselves: as of December 2023, pork exports to Japan grew by 29% in volume and 19% in value, reaching 38,000 tons and 152 million USD. These figures alone show how crucial the agreement is for white meat producers and exporters, as well as for Chile’s growth.

“The first year of the CPTPP is a milestone for Chile in the Japanese market. The treaty gave us access to preferential tariffs, matching the conditions of key competitors like Mexico and Canada. This advantage has been crucial in a challenging year, allowing us not only to maintain but to significantly increase our pork exports to Japan. Our growth showcases the significance of the agreement for our producers and exporters, reaffirming Chile’s strength and growth potential in the international white meat market. We look forward to 2024 and Expo Osaka 2025 with optimism, ready to further maximize the benefits of the CPTPP and strengthen our presence in such a promising market,” said the president of ChileCarne, Juan Carlos Domínguez, association that represents the ChilePork sector brand, with which Chilean pork is recognized in different countries around the world.

Japan is consolidating its position as a key player in the global economic scenario. With a GDP of 4.6 trillion USD in 2022, it is the third largest world economy, only behind the United States and China.

The island country has a high per capita income of 36,415 USD and an average annual salary of 42,554 USD. Japan also has the lowest unemployment rate in the world, 2.4%, and controlled inflation, which did not exceed 2% in 2022. These figures make it a market with high purchasing power.

In the meat trade, the Asian country is the seventh largest global market in terms of consumption, with more than 6.6 million tons per year, and pork is particularly interesting. Despite being one of the largest global consumers, with about 2.6 million tons per year, Japan’s domestic production is relatively low (only 1.3 million tons), offering a significant opportunity for pork exporters.

Domestic production covers only 51% of the country’s pork demand. Per capita consumption reached 20.3 kg in 2022, becoming the second largest after chicken. This positive outlook suggests an expanding and highly promising market for international exporters.

The Chilean Undersecretariat for International Economic Affairs (SUBREI) expects 2,930 tariff lines to see additional reductions after the entry into force of the CPTPP, provided they comply with rules of origin requirements and the tariff elimination schedule. Similarly, the agreement makes Chilean exports more agile and less obstructed, increasing trade with Asia-Pacific countries, while updating trade regulations.

Source: Japanese market figures from INTERPORC Spain.