Is walnut import liberalization beneficial or harmful to Japan?

The import tariff rate for walnuts in Japan is 10%, which is significantly higher than tariffs for other nuts imported to Japan. This report examines the question of whether walnut import liberalization is beneficial or harmful to Japan. The answer is walnut import liberalization benefits Japan. A simulation model is developed which considers the competition between the US and China in the Japanese shelled walnut, shelled sweet almond, and pistachio markets. Tariff elimination of walnut imports to Japan would have increased U.S. exports by 4.7% and generate a gain of 397 million yen for Japanese users in 2002. There are virtually no negative effects on Japanese walnut growers because there are only a few farmers specialized in walnut production and specialized farmers have their own niche markets completely separated from imports. Our results also reveal that the promotion money collected from U.S. walnut growers is effective in increasing U.S. exports to Japan. Specifically, we estimate the incremental gains to U.S. walnut growers to be over three times higher than the incremental promotion costs.