How the China FTA will affect Australian farmers

Nov 18, 2014

It's been called everything from a 'game changer' to a 'bitter disappointment', but regardless of your personal reaction, a free trade agreement with China is now a reality for Australian agribusiness.

While the seafood and dairy industries are celebrating, those producing sugar and rice are wondering again why their industries have missed out in an Asian FTA.

The wine industry is also warning that the FTA is no 'silver bullet'. Rather, there will now be a lot of 'heavy lifting' required by the Federal Government and industry to ensure the promises in the deal are maximised.

Presently the seafood industry sends much of its product over the 'grey wall', getting produce into China via places such as Vietnam and, until recently, Hong Kong to avoid the tariffs imposed by Beijing.

Under the agreement, tariffs on seafood, including 15 and 14 per cent respectively on rock lobster and abalone, will be phased out over four years.

"It will allow our industry to better compete with other countries like New Zealand and Chile who already enjoy full access to that lucrative Chinese market," said South Australian Rock Lobster Advisory Council executive officer Justin Phillips.

Like many in the primary sector, Shawn McAtamney, general manager for Independent Seafood Producers (ISP), would have preferred an immediate cessation of the tariffs.

"Obviously we would like it phased in quicker, but obviously we are part of a much wider agreement and we all have to play a part in where Australian exporters can take the benefits of this Free Trade Agreement.

"There will be opportunities that may well emerge from the Free Trade Agreement, and what they are and by what measure we'll only see over a period of time."

The Cairns-based operation specialises in wild caught seafood such as lobster and prawns, and also exports the sought-after delicacy sea cucumber, or beche-de-mer.

Mr McAtamney believes the tariff removal will also enable a wider range of products to be exported.

"Products that have been hindered by the duties that will be removed by the FTA and may make our products more competitive in times to come."

Dairy industry leaders are celebrating the deal which delivers an equal, and in some cases better, deal than their New Zealand rivals, who've had free trade into China since 2008.

It follows disappointment from the dairy sector over the FTA's negotiated with Japan and Korea.

However, Noel Campbell, from the Australian Dairy Industry Council, says the agreement isn't superior in every respect.

"With respect to some of the tariffs, I think the longevity of them is still quite long, but overall, we're very pleased."

Australia's $385 million lamb and goat trade with China will see the total phase-out of tariffs within eight years.

Government sources say the Free Trade Agreement will reduce the tariffs from the current rate, of 23 per cent for frozen sheep meat and 20 per cent for goat meat, to zero by 2023.

Beef tariffs of 12 to 25 per cent will be eliminated within nine years.

The current trade with China in beef is worth $722 million a year.

Sugar industry leaders say they're frustrated and bitterly disappointed with sugar's exclusion from the Free Trade Agreement with China.

It's the third agreement sugar has been left out of since 2004. It made no gains in FTAs with the United States and Japan.

Peak group Canegrowers and the Australian Sugar Milling Council say they will now use a three-year review period to fight to get sugar included.

More significantly, upcoming negotiations on the TPP (Trans Pacific Partnership) - a regional FTA spanning 12 countries - are viewed as critical for the sugar industry's export opportunity.

A free trade deal with China won't be worth anything unless winemakers and government focus harder on building trade with the Asian nation, according to the Winemakers Federation of Australia.

The freshly minted free trade deal with China will see tariffs of between 14 and 30 per cent on Australian bottled and bulk wine phased out within four years.

China is the third largest export market for Australian bottled wine, behind the United States and United Kingdom. It's also the fastest growing.

Winemakers Federation chief executive Paul Evans says while the deal could be worth tens of millions of dollars, businesses need to work harder to build presence and relationships in China.

"The potential of how much value we can derive from this announcement is really now back in the hands of industry," he said.

"Now that we're going to be at a more level playing field with our competitors, our value and quality is only going to stand taller."

Source: ABC Rural