A free trade agreement (FTA) between Japan and Australia went into effect on Thursday, a deal that both sides say will yield windfalls for their economies.
Australian Prime Minister Tony Abbott and his Japanese counterpart, Shinzo Abe, announced the pact last year, Japan's first with a major agricultural economy.
The agreement calls for Japan to gradually phase out its nearly 40% tariffs on Australian exports of beef. In turn, Australia is to end its tariffs on Japanese-made vehicles, household appliances and electronics. Japanese cars, for example, will cost Australians about $2,500 less after the 5% tariff is abolished.
Talks on the trade pact took seven years as Japan has balked at allowing foreign competition in farm products. The basic agreement calls for the current 38.5% tariff on beef from Australia to drop to 23.5% for chilled beef within 15 years. The tariff for frozen beef will fall to 19.5% within 18 years.
The agreement also sets limits on the amount of beef that can be imported.
According to details from the Australian trade ministry, Japan will make "deep" cuts on beef tariffs in the first year. Tokyo also agreed to increase duty-free imports of cheese and to phase out its tariffs on wine, sea products, honey and many fruits, vegetables and nuts.
Japan also agreed to end, within a decade, virtually all of its tariffs on Australian industrial products.
Japan is Australia's second-biggest trading partner after China, importing over two-thirds of the beef Australia exports.
Both sides see significant potential for growth in trade, and officials say Australians can expect access to less expensive Japanese products thanks to the agreement.
Despite the tariffs it imposes on farm imports, Japan buys more from Australia than it exports to the country, mainly due to its purchases of energy and other resources.
Countries around the Pacific's rim buy 77% of Australia's exports, and seven of its top 10 export markets are in Asia.© Japan Today/AP