Trade

CCA determined to maintain EU market share for Australian grainfed beef

Beef Central, October 17, 2018

CATTLE Council of Australia says it is concerned of reports that the European Union (EU) high quality grainfed beef quota may be altered, to the detriment of Australia’s grain fed beef exports to Europe.

CCA president Howard Smith

In a statement released to media on Tuesday Cattle Council, as a member of the EU Red Meat Industry Taskforce, said it has a firm position to maintain status quo access arrangements on the grainfed quota, ensuring no discriminatory quota allocation, which would be in breach of World Trade Organisation (WTO) rules.

The Taskforce has been monitoring Australia’s access under the grainfed beef quota for a number of years and has relayed the industry position to the Australian Government, who will be the port of call once the European Commission have a mandate to formally negotiate with the US and other substantial suppliers – of which Australia is one.

“This quota is highly valuable to our industry and any loss of access would have a significant detrimental effect on Australia’s grainfed exports given the quote represents three quarters of our total EU beef exports worth approximately A$250 million in 2017-18,” Cattle Council president Howard Smith said.

“Australia’s 3500 accredited European Union Cattle Accreditation Scheme (EUCAS) cattle producers are part of a supply chain which has made substantial investment and ongoing commitment to producing cattle that can service the EU grainfed beef market and therefore any detrimental change to accessing the EU market is a very significant concern.”

Since being verified (January 2010) as an eligible supplier under the EU grainfed beef quota, the Australian beef industry has ensured HGP-free cattle have been sourced from EUCAS eligible producers; the cattle have been segregated in the feedlot regime and fed a high-energy diet to ensure these cattle meet the stringent quota specification.

The EU Council could provide the mandate as early as the next EU Council meeting this week (15-16 October), however firm timelines are unclear.

“If the EU and US agree on a country-specific portion in favour of the US, substantial suppliers such as Australia must be consulted and consent to this allocation.  The Australian Government is currently awaiting notification of this consultation.,” Mr Smith said.

“The Australia beef industry, via the Taskforce, is working in partnership with the Australian Government to ensure that any change in current arrangements are WTO compliant.”

Further information provided by CCA on the EU market:

High quality grain fed quota:

In addition to the High Quality Beef (‘Hilton’) EU quota regime (of which Australia has a 7,150 tonne country-specific quota), premium beef also enters the EU market under the autonomous grainfed beef quota. This quota is for grainfed beef only and has a volume limit of 45,000 tonnes from all sources. It is regularly filled by eligible suppliers – the US, Australia, Uruguay, Argentina & NZ – on a first come-first served basis. The grainfed beef quota is particularly attractive because there is a 0% in-quota duty – compared to the 20% in-quota duty applicable to the Hilton quotas.

The quota was established to compensate the US for winning a WTO dispute against the EU for banning imports of hormone-treated beef. Australia did not join this dispute and therefore has no ownership or rights under this MoU.  Australia, however, access quota under the WTO’s ‘Most Favoured Nation’ (MFN) provision, which obligates the quota to be available to all eligible suppliers providing equivalency to the grainfed specification can be demonstrated.

Australia was granted access on an ‘MFN’ basis in early 2010 and has since become a large supplier with 28% share of exports in 2016/17.  Volumes from Australia have been as high as 17,000 tonnes but are now around 13,000 tonnes.

On 3 September 2018, the European Commission released a statement outlining a process in seeking a mandate from the European Council, to commence negotiations with the US on amending the quota. The US may be allocated a country-specific portion of the 45,000 tonne quota as opposed to the current arrangement which is non-discriminatory and available to any eligible supplier.

If a US country specific portion is agreed, Australia’s access could be severely diminished. Reports indicate that the US is demanding a majority country-specific share of up to 35,000 tonnes, leaving only 10,000 tonnes for all other eligible countries (Australia, Uruguay, Argentina and New Zealand). Given Australia’s previous trade performance has reached a high of 17,000 tonnes, such a proposal to restrict volumes to a share of 10,000 tonnes is untenable and commercially unviable.

EU Red Meat Market Access Taskforce:

Cattle Council is a member of the EU Taskforce, the Australian red meat industry’s steering committee responsible for guiding and driving improvements in beef (as well as sheepmeat and goatmeat) market access into both the EU and UK. The Taskforce has been established by industry through the Red Meat Advisory Council (RMAC) and comprises representatives from each sector across the supply chain (producers, processors, exporters and the industry service providers), drawing heavily on the collective expertise, intelligence from strategic alliances and trade contacts and leveraging the unique position of MLA’s on-the-ground market access representation.

The Taskforce works to determine actions as well as developing a program of engagement to ensure a common industry view is taken forward to the Australian Government – which is ultimately responsible for prosecuting positions on behalf of the industry through formal negotiations.

 

Source: Cattle Council of Australia

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