China deal a 'cracking' win: NFF

17 Nov, 2014 03:45 PM
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Prime Minister Tony Abbott and Chinese President Xi Jinping. Photo: Alex Ellinghausen
This is a massive shot in the arm for Australian agriculture
Prime Minister Tony Abbott and Chinese President Xi Jinping. Photo: Alex Ellinghausen

THE Australia-China Free Trade Agreement (FTA) represents a “cracking agreement” that surpasses expectations for tariff reductions on four key farm exports, says National Farmers' Federation (NFF) president Brent Finlay.

But the staged trade deal has generated disappointment for other prime commodities such as rice and sugar. These sectors will continue negotiations ahead of a three-year review.

Prime Minister Tony Abbott today confirmed the decade-long FTA process had been concluded following his meeting with Chinese President Xi Jinping in Canberra this morning.

Trade and Investment Minister Andrew Robb and Chinese Commerce Minister Gao Hucheng signed a Declaration of Intent this afternoon.

The FTA contains outcomes for other products and services to expand two-way trade currently valued at $150 billion between the two countries, with agriculture a critical component of future trade.

Five stars from NFF

Mr Finlay said the NFF rated the final details of the FTA according to outcomes for various commodities and awarded "top points" of five stars to dairy, beef, sheepmeat and horticulture.

He said dairy products such as cheese, milk formula powder, butter, liquid milk and yoghurt currently had 10 to 19 per cent tariffs that would now be fully eliminated in four to nine years.

Tariffs of 12 to 25pc on boxed or frozen beef would also see full tariff eliminations in four to nine years, he said, while tariffs of 5 to 8pc on cattle hides would be eliminated in two to seven years.

Mr Finlay said tariffs on live sheep and cattle of 10pc would be eliminated in four years and had also earned a five-star rating.

He said for sheepmeat, tariffs of 12-23pc would be eliminated in eight years and a 7pc tariff on skins would also be eliminated in four years.

A tariff of 11-30pc on citrus would be eliminated in eight years while tariffs on other horticultural products would be phased out in four years.

“In the negotiations we argued to get a New Zealand equivalent or better outcomes for red meat and dairy which would have made us very happy, but this has gone beyond that expectation and is a cracking agreement,” Mr Finlay said.

“The NFF members and I strongly congratulate the Trade Minister Andrew Robb and the federal government for landing another free trade agreement. We also congratulate industry for the volume of work they’ve put into these negotiations with the government.

“We think this is another major milestone between Australia and China and this is a massive shot in the arm for Australian agriculture.

“We’ve long talked about it, but we now have an agreement that’s good for Australia and China’s consumers.

“I think there’s a huge sense of relief from all those who’ve been very close to these discussions and we’re looking forward to a long-term marriage that’s going to be very productive for all parties.”

'Problematic' outcomes for sugar, rice

Mr Finlay said from the start of the negotiations, it was obvious that rice and sugar would be “problematic”, given China’s domestic strength in those commodities.

“Given there’s a three-year review of this agreement, there will still be negotiations around the agreement,” he said.

“That’s why these other commodities are still in the mix.”

For grains, Mr Finlay said tariffs on cotton seed of 15pc would also be eliminated over four years, while tariffs of 3pc on barley and 2pc on oats, millet and buckwheat would be eliminated immediately.

He said the NFF had also given wool a three-star rating with its quota increased.

Australia’s agricultural exports to China were $8.7 billion in 2013-14 - including $785m in beef, $421 in dairy, $393m in sheep, $270m in cotton seed and $82m in horticulture, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.

Negotiations to continue

Western Australian Liberal Senator Chris Back said the Australia-China FTA announcement today should not be seen as the end of a “once only” negotiation process.

Senator Back said the FTA would establish a platform for building trade opportunities for other commodities, as business-to-business and government-to-government relations deepened between the two nations.

“I’d be hoping that as each side builds up more confidence in the other, when the time comes for other commodities like rice and sugar, Australia would be seen as having favoured status,” he said.

Senator Back said the deal also had strong opportunities for the services sector, such as banking and corporate governance.

He said there was also “very bright scope” for education opportunities that extend to the agricultural space, for Australia to provide services relating to agribusiness, farm production and other supply chain expertise.

Shadow Trade Minister Penny Wong said only by tabling the full text of the FTA can Mr Abbott satisfy the Australian parliament and the community that the deal is in the national interest.

“Labor is deeply concerned that key export sectors like sugar have been told to expect nothing from the deal,” she said.

“Mr Abbott has talked about a two-step FTA - the fact is, Australia can't afford a second-rate FTA with China.

“A first-rate China-Australia FTA will feature NZ-plus market access outcomes for Australian farmers and other exporters; elimination or significant reductions in tariffs on Australian industrial goods; and retention of Australia’s anti-dumping safeguards.”

Beefing up cattle trade

Chairman of the Australian Livestock Exporters’ Council, Simon Crean called the tariff-free access gained by red meat sector "a huge win" for producers and exporters.

“It shows that bipartisanship and persistence can deliver good outcomes for the nation," he said.

“Anecdotally, 1 in 3 Australian dairy farmers are now producing stock for the China market so today’s announcement is a further gain on improved access for the Australian dairy sector."

Mr Crean said calculating the benefits for a feeder and slaughter cattle trade would have to wait for health protocols to be concluded by the two governments.

“While we see massive opportunities for the live trade into China, recent speculation has overstated the volume of exports in the short to medium term.

“There is much work yet to be done to commercialise the protocol arrangements including establishing compliant supply chains, arranging shipping capacity and finding cattle that meet the market specifications. Such arrangements will be limiting factors in the foreseeable future."

Chairman of the Australian Red Meat FTA Taskforce David Larkin said with NZ beef and sheepmeat gaining tariff free entry by 2016, it was "vital that Australian red meat products were afforded similar (albeit lagging) access arrangements”.

The Australian red meat and livestock sectors will benefit by $11 billion from the elimination of tariffs negotiated under the deal, according to Meat and Livestock Australia (MLA).

Once fully implemented an FTA with China has the potential to boost the gross value of beef production by $270 million annually by 2024, MLA said, and out to 2030, the total benefits for beef could approach $3.3 billion.

For the sheepmeat sector, the potential benefits are forecast at more than $150 million each year by 2024 – with the value over the next 16 years being in excess of $1.8 billion.

Australian Wool innovation (AWI) said the agreement was the result of years of hard work by scores of trade officials who had worked to achieve this outcome.

In addition to the existing tariff rate quota of 287 million kilograms on raw wool at 1pc, the FTA also delivers a duty free country specific quota (CSQ) of 30M kg clean wool. The CSQ is to increase by 5pc over eight years to 45M kg.

- with FarmOnline

FarmOnline
Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

Haydn
17/11/2014 3:55:36 PM

My god Penny Wong has a short memory when lecturing us what is a good agreement when labour achieved no agreement at all in 7years
TFO
17/11/2014 4:18:13 PM

Nothing mentioned for the grain industry? In 4 years time what is left of our horticultural and fruit industries will be in Chinese hands anyway. So will our dairy industry. So why all the excitement?
Very Woolly Thinking
17/11/2014 10:22:34 PM

Could someone wake up the AWI seat warmers in their plush Sydney offices and ask what went wrong. Aussie wool to China is a $2 billion pa business but there is naff all in this FTA for wool. Again AWI fails the credibility test.
Gecko
18/11/2014 8:49:56 AM

"Free Trade", what free trade. Control by the Chinese on what Australia can export to them. The "believers" of "free trade" are akin to "flat earth" belivers.
fineprint
18/11/2014 11:39:43 AM

for those complaining that there is nothing in it for grains check the internet for goodness sake, almost all chinese grain import tariffs are set at 1% within the quota limits set each year, with the odd grain having 2-3% tariffs. Only once you're over the quota do tariffs jump to 65%. Not much value to be provided by going tit-for-tat with the chinese over a 1% tariff when there are big gains to be made elsewhere. c'mon team australia, enough of the Tony bashing, provide some credit where it's due and direct your criticism to more valid causes like scrapping the proposed paid parental leave.
TFO
18/11/2014 12:42:21 PM

Thank you fine print. Please tell us also what are the annual quotas for wheat, barley and canola in tons please?
fineprint
18/11/2014 1:28:40 PM

sure. latest quotas i have access to are as follows, but please check yourselves to ensure accuracy: wheat 9.6Mmt, barley 2.3Mmt, canola 3.7Mmt, corn 7.2Mmt. rice 5.3Mmt cotton 0.9Mmt sorghum - no quota. soybeans - no quota. est 64Mmt. i mean look... i agree we should relabel these Free Trade Agreements as something far more accurate... like "Temporarily Less Restricted Trade Agreements". The Chinese, like us, will now use bio security and other levers as required to protect their people and industries from more efficient overseas entrants.
TFO
18/11/2014 5:10:20 PM

Thanks Fine Print. For a country consuming some 400 million tonnes annually and producing around that amount also, 64 mt of import quotas is not huge is it. And for a country like Australia with exportable surplus of some 15 -20 mt wheat, 4 mt barley, 3 mt canola plus sorghum, lentils, lupins, and other crops, it is not a lot to get excited about but we should be thankful for each improvement I guess.
GFA
19/11/2014 6:24:44 AM

Now the China FTA is signed, we see the real devil in the detail coming out. In todays news reports, we see our Government has given permission to our competing Chinese Corporations, when operating here, to supply their own cheap Chinese Labour. Our local businesses will not be given the same privilege. In other words, the Chinese will be given a critical input cost advantage over local businesses working alongside them in our own country. THIS IS TREASON AGAINST AUSTRALIANS. It is outrageous.
Bushie Bill
24/11/2014 8:16:33 AM

GFA, what you claim is laughable and patently untrue. If you did a modicum of your own research before posting, you would see that your claims are outrageous, ridiculous and totally unrelated to reality. As you make such claims recklessly, it can only be concluded that you have no place for facts or the truth in your philosophy. You are either a fool or you believe everyone else is. I know which option I would tick.

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