Changes to the TPP agreement in Japan will mean increase competition for Chilean wines in the future.

August 9, 2016

 

As Chile celebrates being the top supplier of wines to Japan, the question is how long can it maintain this position given the changes to the TPP Free Trade Agreement?

 

France has long been the number one supplier of wine to Japan, however in 2015 the situation changed and Chile knocked France off its first position.  Although the difference is only 72,000 litres, and Japan imported a total of 51,593 thousand litres from Chile in 2015,  it represents a change in consumer preferences and an indication that lower priced wines rather than a continual loyalty to French wines is on the increase. 

 

Chile´s position as number one supplier however may not be for long, as the rise in Chilean wine sales was boosted by their Free Trade Agreement with Japan that lowered Japanese import taxes on Chilean wines from 2007.  According to the Gain Report, the average wine unit value per litre of Chilean wine was $2.97 USD versus $7.95 USD for French wines.  From 2016 however, the announcement of reductions in tax tariffs under the Trans-Pacific Partnership Agreement (TPP) - a regional free trade agreement of 12 countries - including Australia, Canada, USA, Chile, New Zealand, Japan, Malaysia, Mexico, Peru, Singapore, Brunei Darussalem and Vietnam will come into play.  Each member country has negotiated their own agreements for different product categories, and wine is set to see an elimination of tariffs ranging from immediate to within 10 years depending on the country, forecasting increase competition for Chile as the reigning champion of of the low price low tax wines into the Japanese market. 

 

Read the full TPP agreement here 

external links: What is the TPP and why does it matter? bbc.com

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