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U.S. Could Expand Apple Exports to Japan

The World Trade Organization (WTO) recently ruled that part of Japan’s phytosanitary protocol for imports of U.S. apples was not justified and was in breach of Japan’s WTO obligations. The Japanese phytosanitary protocol for apples included restrictive rules for inspection, buffer zones, and chemical surface disinfection, procedures that are not normally part of the standard U.S. industry operating practices for apples. The United States is a major apple exporter with sales to 85 countries in 2004. Many countries accept U.S. apples produced under the standard U.S. industry operating practices with the addition of a phytosanitary certificate asserting that the packed apples have been inspected and are free of diseases or pests of concern. Other countries only accept U.S. apples grown with additional production or postharvest practices. Some of these additional practices can be quite costly.

With strict phytosanitary rules severely restricting apple imports, Japan has relied on its domestic production to satisfy consumer demand. Japanese apple prices tend to be high, and per capita apple consumption is among the lowest in developed economies, 5.9 kilograms (13 pounds) a year between 1991 and 2003. That was 73 percent of average U.S. per capita consumption—8.1 kilograms (18 pounds)—and less than one-third of the 17.9 kilograms (39 pounds) consumed on average in the European Union. Japanese consumers often eat apples as a dessert, with one apple, often a Fuji apple, divided among several diners. They do not tend to eat them as snacks as do U.S. consumers. However, Japanese tastes may not be static. Japanese consumers may be open to U.S. sweet apple varieties or even traditional tart apples, and U.S. growers might be able to build a Japanese market over time.

On August 25, 2005, Japan issued new regulations eliminating the procedures that were the subject of the U.S. complaint. As a result, U.S. growers could have new opportunities to supply the Japanese market. Using an economic model of the Japanese apple market, ERS has estimated what Japanese imports would have been without the restrictive phytosanitary protocol. The analysis gives an indication of the longrun potential of U.S. apple sales to Japan. It suggests that, with the elimination of the protocol, Japanese consumers would increase their per capita consumption of apples by about 11 percent to 6.4 kilograms, still below U.S. per capita consumption. The additional imports would significantly affect the U.S. apple industry.

This article is drawn from...

Resolution of the U.S.- Japan Apple Dispute: New Opportunities for Trade, by Linda Calvin and Barry Krissoff, USDA, Economic Research Service, October 2005