With the European Union and the United Kingdom navigating a messy Brexit divorce and the United States and China locked in a trade war, Australia is facing a challenging global trade environment.
Amid the disruptions, Meat & Livestock Australia remains focused on working closely with industry stakeholders and the Australian Government to turn road blocks into opportunities in export markets and address both tariff and non-tariff trade barriers.
The EU and UK are key potential markets in terms of improving our market access, and the US and China are important customers for Australian red meat.
One of our key market access priorities is with the EU. Top of mind is defending our grainfed beef access, which is under threat from the US which is wanting to carve out the majority of the 45,000 tonne quota for US beef. We are also seeking to improve our long-term access arrangements with the EU for both beef and sheepmeat/goatmeat via the Australia-EU Free Trade Agreement – and encouragingly, those negotiations have started.
Secondly, we’re working to avoid any detrimental impacts resulting from Brexit. It’s possible that our beef and sheepmeat quotas into the EU could be split between the UK and EU, making our current small quotas even smaller and reducing our flexibility to trade around Europe. This accompanies our efforts to be in the first tranche of countries to strike an FTA with the UK – once the UK is in a position to start bilateral trade negotiations.
Our ongoing effort in the EU and UK will build on the significant gains in market access the Australian red meat industry has already secured, particularly through the trifecta of FTAs with South Korea, Japan and China.
The value of these FTAs should not be underestimated. To quantify this, these three FTAs are estimated to be worth $20 billion over the next 20 years – that’s $1 billion in extra value just by removing the tariff impost on our products.
To break that down even further, the China-Australia FTA (ChAFTA) alone is underpinning beef prices by about 8c/kg and sheepmeat prices by 13-26c/kg.
These FTAs have helped provide Australia with a clear preference over just about every other beef exporter in the world, giving us access into markets that some of our competitors don’t have. Our closest competitor in terms of favourable global access is New Zealand.
Our industry will enjoy even greater market access when the long-awaited Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP), or TPP-11, comes into force on December 30 this year. It will add significant value to the Australian red meat and livestock industry by creating new export opportunities.
On offer via TPP-11 is free access (after an implementation period) into Canada and Mexico (where Australia does not have existing bilateral FTAs); Peru (pending finalisation of protocols); and even further tariff reductions for beef into Japan (beyond our existing Japan-Australia Economic Partnership Agreement outcomes), which will ultimately see tariffs reduced to 9 per cent. This reduction of tariffs by Japan will place Australia well ahead of the US, our major competitor in the market, as US beef will remain on a 38.5pc tariff unless an FTA is struck between the US and Japan, or the US re-joins the CPTPP.
Many of these achievements have been achieved through the advocacy implemented via industry’s Market Access Program, which is jointly funded by producer levies matched with processor contributions.
While progress has been made in reducing tariffs, there’s an ongoing challenge in addressing non-tariff barriers (NTBs) to trade – which have been increasing in incidence on a global basis.
The impact of NTBs on Australian sheepmeat, beef and goatmeat industries has been estimated (via industry research conducted in 2016) to be around $3.4 billion a year in unrealised or lost value.
On the upside, we have chalked up some gains in alleviating this impact. In Indonesia, for example, we now have access for secondary beef cuts and offal, which were previously banned items. We’ve also seen some gains via the extension of shelf-life provisions in the Middle East and most recently Iran for high-value chilled product.
Looking at future reform efforts, we still have about $1.6 billion in future value to reap out of FTAs, while in terms of NTBs, we have set our sights on capturing more of the remaining $2.4 billion in impact value.
Industry’s other targets include successfully securing benefits from the Regional Comprehensive Economic Partnership negotiations, which has great potential for Australian sheepmeat exports into India, and an FTA with the Gulf Cooperation Council (GCC), to address tariffs and the costs associated with certification into the Middle East.
Future markets we have identified include Taiwan, which is the missing piece in our North Asia markets, and potentially South Africa.
- Andrew McCallum is MLA Global Manager - Trade and Market Access.