EUROPEAN parliamentarians have told Australian beef exporters in no uncertain terms either they make way for an European Union-United States deal on the grainfed no-hormone quota or they risk having it entirely cancelled.
Romanian European Parliamentarian and special rapporteur for free trade agreement negotiations with Australia Sorin Moisa said Australia had “a good legal point about access to this quota but not a good moral or political point because it was about the EU and the US first and foremost.”
For Australia, the solution was in FTA negotiations “rather than excessively insisting on something that was originally offered to the Americans,” he said.
Australian producers are extremely anxious about the risk the US is about to secure the lion’s share of the quota, known as 481, which allows up to 45,000 tonnes into Europe tariff free and is typically filled by the US, Australia, New Zealand, Uruguay and Argentina, with Australia’s contribution peaking at 17,000t.
In the past financial year, the 481 quota accounted for three quarters of Australia’s EU beef exports, worth $250m.
International media has been reporting the EU may give the US as much as 35,000t of the quota under a country-specific arrangement in a bid to defuse wider-spanning trade tensions.
Mr Moisa said 35,000t “may be a landing zone but I can not guarantee a figure.”
He was part of a delegation for relations with Australia and New Zealand which made a three-day visit to Australia this week. Mr Moisa has been tasked with writing the report recommending to either approve or kill off the EU-Australia FTA when it eventually reaches the European Parliament.
His extremely influential position makes his comments on Australian beef’s battle to improve access to what is its highest value market on a per kilogram basis very potent.
“We are negotiating with the US and likely to reach an agreement,” he said in relation to the 481 quota.
“We hope it will be one Australia, Uruguay and other countries that have an interest in this quota will be able to accept.
“Quite simply, if there is no agreement with the US we will cancel the quota altogether and everybody loses out, including Australia.”
Australian beef producers are pinning their hopes on the fact any change to the quota, in order to be compliant with the World Trade Organisation, has to occur in consultation with Australia.
However, Mr Moisa explained the quota was “essentially a bilateral agreement between us and the US but it did create a legal entitlement for others to join the quota.”
In the past few years, the US “realised a significant portion of this quota which had been dedicated to the US, or adopted in the context of a settlement with the US, was being used more and more by others,” he said.
“They did not like that, obviously.
“The US has a point and therefore the wise thing is to look to find a compromise with the US and hopefully Australia and others will agree, and then deal with this issue further as part of FTA agreements,” he said.
“No doubt Australian farmers have been developing strong trade relationships using this quota but American farmers have too and now the Americans want to catch up a bit of lost ground.”
Asked if the EU might lift the 45,000t limit, Mr Moisa said: “No way.”
“It is very clear in the mandate the EU Council gave to the Commission that it is 45,000t and not a tonne more and if we do not find a solution we cancel it altogether and start negotiating bilaterally,” he said.
He said the “most optimistic date” for conclusion of FTA negotiations with Australia was 2020.
Fellow European Parliamentarian Ulrike Muller, a dairy farmer from Germany, said the EU attached much importance to the friendship with Australia and certainly liked Australian agricultural products, which were very popular in Europe.
Speaking via an interpreter, she said: “What we are here to see among other things are the different production styles used in Australia and to create more understanding among Europeans for the way agriculture production happens in Australia.
“The European market for agriculture is very much geared to regionality. Our consumers in Europe appreciate quality and specialty products to a high degree.
“At the same time, we are very much dedicated to protecting our small farmers. We have a great responsibility to European farmers who are working very hard to do sustainable agriculture.
“Striking a balance is an art.
“The market share for Australian products will probably always remain very small because it focuses on quality and specialty.”
Mr Moisa said European farmers would need more understanding of Australian agriculture production systems “to be able to accept this would be fair competition.”
“Our farmers are interested in cost structures,” he said.
“They see Australian farmers are more competitive than them due to structural reasons not dependent on how well the farm is managed.
“For instance, our cattle spend winter indoors because of our climate, which means big costs.
“In your case, the cattle spend happily all of the year outside.
“Of course, we see Australia has huge additional costs for transport.”
Australian beef representatives regard that as a selective view on the differences in production systems.
Chair of Australia’s red meat market access taskforce to the EU Jason Strong said: “The production challenges we have from climate may be different but they are no less severe.
“And the big thing is we don’t have the subsidies European producers do. We bear the full costs of production.”
Meat and Livestock Australia’s global manager for trade and market access Andrew McCallum said that in turn flowed through to Australian beef’s constant quest for efficiency.
“Producers around the world have similar challenges and climate is one of them,” he said.