THERE was qualified support from most beef industry, trade and political stakeholders following the signing of the Australia-Japan Free Trade Agreement by prime minister Tony Abbott last night.
Over the next 20 years, sales of Australian beef to Japan were expected to rise by $5.5 billion as a result of the AJFTA, Meat & Livestock said in a statement issued after Beef Central broke the news of the announcement and details of the agreement earlier last evening in a news-blast to subscribers.
Over the life of the agreement this boost in sales would increase the annual gross value of Australian beef production by up to seven percent, MLA suggested.
The reduction in tariffs for Australian beef would create opportunities for increased Australian beef sales into Japan and improve the affordability of beef to Japanese consumers.
Japan Task force chairman Lachie Hart thanked the prime minister, Mr Abbott, trade minister Andrew Robb and his negotiating team for their efforts in what had been difficult negotiations.
Mr Hart said the Australian beef industry stood to benefit substantially from trade agreements entered into with Korea and, now, Japan under this Government.
“Almost 70 percent of all Australian beef produced is exported, so positive outcomes on trade negotiations are enormously beneficial for the industry. We wish to congratulate the new Government for the outcomes being achieved on freer trade.”
Mr Hart expressed the hope that the AJFTA would accelerate the process of agricultural reform in Japan.
“Hopefully the successful completion of an AJFTA will be the harbinger of further liberalisation of the beef market into Japan, with tariffs being eventually eliminated and other impediments on the trade removed.
“We understand that the Australian Government achieved the best result it could for the Australian beef industry given this is the first deal Japan has done with a major agricultural exporter – and we are pleased with the progress made. However, we hope that this outcome represents a first step, with the industry seeking further gains through future trade reform efforts with Japan via the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership negotiations.”
“We wish the minister further success in these future negotiations,” Mr Hart said.
CCA has mixed feelings
The Cattle Council of Australia welcomed the finalisation of the Australian/Japan FTA and reduction of beef tariffs following the Prime Minister’s announcement.
CCA president, Andrew Ogilvie, acknowledged the significance of the tariff reductions for Australian beef producers and the work put into the finalisation of the agreement.
"Agreeing on a final deal, particularly given Japan's sensitivities around beef, would have been an unenviable task," he said.
“The finalisation of the FTA will have benefits for both Australia and Japan; creating opportunities for increased Australian beef sales into Japan and also improving the affordability of beef to Japanese consumers.”
“However, Cattle Council is disappointed that substantial tariffs will still exist on Australian beef after the phase-out period, unlike previous free trade agreements, and also that different tariffs apply to chilled and frozen beef.”
“Cattle Council understands the Australian Government achieved the best result that it could for the Australian beef industry, particularly as this is the first deal Japan has done with a major agricultural exporter,” Mr Ogilvie said.
“We hope that the AJFTA will bring opportunities for further liberalisation of agricultural trade into Japan, and specifically for beef, will result in tariffs eventually being eliminated and other impediments for trade removed.”
CCA would work to continue building relationships with Japanese beef producers in coming months, he said.
Australian Lot Feeders Association president Don Mackay said that while the tariff reduction would take cost out of the supply chain, that benefit would flow differently at different times – depending on who had the strength in the meat trade negotiation process at the time.
"While its a good first step, there's a lot more opportunity to come over time," Mr Mackay said.
"This agreement protects the Australian beef industry in the sense that if a better deal comes along through TPP, for example, then we would gain the benefit of that. The other issue is the potential for the snap-back tariff to be applied. That was originally a concern to us, but because the agreement includes quite liberal growth in the safehuard trigger level, we don't see that that will be a problem, and nor is it mandatory."
Another positive aspect was the front-loading aspect of the deal.
"Yes, it is over 15 or 18 years, but much of the benefit will happen earlier. And looking at earlier FTAs, people think that they are over long time-frames, but the US/Australia FTA timeframe has now already come and gone."
Mr Mackay said the rise in the Japanese currency value recently had also meant that clearly, there was less Australian product flowing to Japan than what had been seen previously.
"It got past parity, on a Yen verses cent basis, so it makes exports to Japan more difficult. And with the increased demand in other countries – China, Middle East, Indonesia and Europe – all these things add up to enhanced ability for Australian beef production to go all over the world."
"Given the timing to get the Japanese to move, this was probably the best opportunity Australia has had for a long while."
US cattlemen condemn agreement as '20th century thinking'
The US National Cattlemens Beef Association issued a brief statement tonight, saying it was "deeply concerned that the Bilateral Trade Agreement between Japan and Australia does not call for full tariff elimination."
"This Bilateral Agreement undermines the long-standing goals and principles that are the base of the Trans-Pacific Partnership (TPP)," the NCBA statement said.
"This development only pushes the high-standing ideals of TPP further out of reach for all countries involved, and it is not a move that US beef producers can support. The TPP has been referred to as a twenty-first century agreement, but this bilateral agreement is from the twentythi century playbook, and will not serve to foster open trade and certainly will not benefit consumers and producers globally.”
NFF says agreement falls short
The National Farmers Federation said it recognised that the Australian government had demonstrated its commitment to complete agreements with key trading partners, such as South Korea and now Japan.
President Brent Finlay said he understood the difficulties involved with negotiating such an agreement, and acknowledged both Minister Robb and Prime Minister Abbott for securing the agreement.
“We recognise the historical significance of the agreement. However, we are disappointed with the overall outcomes for agriculture with a number of sectors facing marginal improvements or limited commercial gains,” Mr Finlay said.
“The agreement appears to be positive for Australian beef, horticulture and seafood, with a range of tariffs being reduced over time. We understand there is a commitment to review the agreement in five years, which is an opportunity to continue to improve the arrangements,” he said.
The sensitivities surrounding some parts of Japanese agriculture has made reaching an agreement more challenging. Australia is the first major agricultural exporter to achieve some movement on some of Japan’s high import barriers. While the agreement has provided some concessions, Australian farmers needed more.
“The ultimate objective with any trade agreement is to obtain tangible benefits to farmers. Agreements must be comprehensive. That means, no sector carve-outs and elimination of tariffs. The Japanese agreement falls short of the mark on a number of fronts in this regard,” Mr Finlay said.
“Securing good deals for agriculture is always a difficult part of any negotiations and it is clearly the case for Japan. Given we export 60 percent of the food and fibre we produce in Australia, our farmers need good commercial outcomes from future trade negotiations.”
The NFF said it was committed to working with government to pursue opportunities in export markets that will deliver profits back to agribusiness and farmers.
AGFORCE welcomed the finalisation of the FTA after many years of work from both Government and the cattle industry in securing an arrangement that reduces the tariff burden on Queensland beef.
However, despite these reductions for Australian product entering Japan, the organisation was now looking to Government to continue to work to further rescind the trade disadvantage Australian beef producers have long experienced in the Japanese market.
In a statement issued this morning, AgForce cattle president, Howard Smith said the AJFTA was a positive first step towards taking full advantage of potential for heightened beef exports to the Asian region.
“For seven years the cattle industry, including AgForce and Cattle Council of Australia, have been working with Government to finalise this agreement and we certainly acknowledge this is the result of this hard work,” Mr Smith said.
“But despite the decrease a substantial tariff still remains which we should be targeting to have further reduced.”
Mr Smith said he understood the existing reduction marked a significant achievement for the Australian Government given this was the first FTA Japan had entered into with a major agricultural exporter, however more was needed.
“We acknowledge this is of clear benefit to the beef industry given the reduction will halve the tariff burden from $590 million over 18 years. However we must point out that 19.5pc remains a substantial cost that ultimately must be absorbed by producers."
“What we now must see is continued work to build upon this good start so as to realise the market opportunities that exist and to capitalise on Australia’s potential to supply the world with a safe and premium product.”
Federal Opposition will apply scrutiny
Opposition trade spokesman Penny Wong said while Labor welcomed the completion of negotiations for an agreement, it would scrutinise the detail closely to ensure it is in Australia’s national interest.
"Australian beef and dairy are already strong exports to Japan and improvements in market access for farm goods like these will be an important boost for our agricultural industries," she said.
"However, Labor notes reports that the Abbott Government has agreed to tariffs which appear less beneficial than those secured for Australian beef in the recent free trade agreement with Korea. Labor will examine the extent to which this agreement tackles non-tariff barriers to Australian exports to Japan, such as quotas, statutory import licensing and marketing arrangements and subsidies."
A genuinely comprehensive trade agreement needed to go beyond the focus on “cows and cars” by covering a wide range of goods and services as well as trade rules and mechanisms, Ms Wong said.
Labor would be concerned if the agreement includes Investor State Dispute Settlement provisions, which would allow Japanese companies to take legal action against the Australian Government.
- Click here to view Beef Central's detailed study of the FTA deal for beef, published minutes after its announcement earlier this evening.
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