AUSTRALIAN chilled and frozen beef will enjoy a further relaxation in tariffs on exports into Japan from today, as the latest round of market access improvements cuts-in under the Japan-Australia Free Trade Agreement.
Today is the first day of Japan’s new financial year, and heralds the latest round of tariff concessions on Australian beef. For the next 12 months our chilled exports to Japan are exposed to a tariff of 30.5pc, while frozen exports will attract a 27.5pc tariff.
Compare this with the situation before the FTA came into force 15 months ago, when Australia paid a flat 38.5pc tariff on all beef exports – the same figure still applied today to Japan’s beef imports from the US, which creates an ever-larger competitive advantage to Australian exporters.
Deputy prime minister and minister for agriculture, Barnaby Joyce, said the latest round of tariff cuts and quota relaxations would provide more benefits and opportunities to exporters of a range of agricultural commodities, including beef, dairy products, wine, seafood, nuts and horticulture products.
“Trade agreements continue to deliver real, tangible benefits to agricultural producers and exporters,” Minister Joyce said.
“Japan remains one of the world’s top buyers of agricultural, food and fishery products from world markets, with imports worth US$70 billion in CY2014. Japan is also one of the world’s top markets for premium food and beverage products, as I saw first-hand during my visit last November. So the Japan-Australia Economic Partnership Agreement (JAEPA) is a big deal for Australian agriculture.”
“On the back of increased exports of higher value cuts and chilled grainfed beef, we have already seen our exports of beef to Japan increase by 15pc to $1.9 billion in 2015, compared to $1.6 billion in 2014,” Mr Joyce said.
Beef offal has also seen strong growth through the reduced tariffs within an Australia-specific quota, with exports worth over $204 million in 2015—up 26pc from $162m in 2014.
Minister Joyce said trade agreements, like the JAEPA, provided Australian exporters with an important advantage over international competitors who did not have agreements in place, and levelled the playing field with those who did.
“Global demand for quality agrifood products continues to grow—for example, the real value of Asian agrifood demand is projected to double between 2007 and 2050,” he said.
“The trade deals the Australian Government has secured in addition to the JAEPA—including with China and Korea, as well as the recently signed Trans-Pacific Partnership—combined with our world-class reputation as a reliable supplier of safe, clean and green agricultural produce, help put Australia’s farmers in a strong position to take advantage of these exciting global opportunities.
“Our farmers and our agricultural produce are the best in the world, and I am thrilled to see how our producers are already taking advantage of the opportunities presented by these new trade deals to further themselves in global markets.”
Export sales reflect FTA tariff impact
Former trade minister Andrew Robb, who orchestrated many of Australia’s trade access deals over the past three years, recently said that export sales across a variety of commodities to Japan had jumped since the FTA came into force last year, as businesses capitalise on the opportunities created.
Beef export values for both fresh/chilled and frozen beef grew by 24 and 15pc respectively, while the export value of beef tongue – a popular dish in many Japanese restaurants – increased by 75pc to reach more than $52 million.
Mr Robb said the growth in export numbers to Japan replicated the positive impact the Korea-Australia Free Trade Agreement had had on exports to that part of Asia.
“The latest data shows Australian businesses have been quick to capitalise on the agreement with Korea, and the historic FTA with China – which entered into force late last year – is expected to yield similar results,” Mr Robb said.
“What these figures show is that not only has tariff relief made our traditional exports stronger, it’s created opportunities over the past 15 months in emerging areas where we were previously not competitive and had no market share.”
Mr Robb said there’s no doubt Asia’s growing middle class is developing a taste for Australia’s clean, green produce.
“The outcomes we’re seeing from these trade agreements further underline the importance of bilateral trade deals in improving our competitive position in the major markets of North Asia. I encourage all businesses to take full advantage of the opportunities the FTAs are creating,” he said.
Beef FTA Snapshot
JAEPA is delivering Australian beef producers and exporters an unprecedented competitive advantage in their most important market.
Japan is Australia’s second largest market for beef, with exports totalling $1.9 billion in 2014-15. Australia is the largest imported beef supplier.
Prior to JAEPA, Australian beef exports to Japan faced a 38.5pc tariff. Additionally, if Japan’s imports of beef from all sources increases rapidly, that tariff automatically jumped to 50pc under Japan’s “global snapback” safeguard mechanism. Australia has faced the 50pc tariff jump three times since 1995.
JAEPA has already given Australia three tariff cuts on beef that will grow and protect this important market. Beef outcomes include:
- For frozen beef, the tariff facing Australia fell from 38.5 per cent to 30.5pc on 15 January 2015, giving an immediate competitive advantage, and continues to phase down to 19.5pc over 18 years.
- For fresh beef, the tariff facing Australia fell from 38.5pc to 32.5pc on 15 January 2015, giving an immediate competitive advantage, and continues to phase down to 23.5pc over 15 years.
- Australia (unlike any other country) will never again be subjected to the automatic 50pc “global snapback” tariff.
- Japan has the ability to apply a discretionary safeguard and raise the tariff back to 38.5pc if the import volume exceeds Australia-specific triggers within a given year.
- The starting triggers are set well above recent trade levels (14.5pc above 2013 exports for frozen beef and 12pc above 2013 exports for fresh beef) and rise each year for ten years before being reviewed.
Japan is also a vital market for Australian beef offal and beef products, with exports of $172 million in offal and more than $22 million in preserved and prepared beef in 2015.
- Beef offal tariffs of up to 50pc were reduced immediately to 30pc, under a growing quota large enough at the start to cover most of Australia’s beef offal exports.
- Tariffs on prepared and preserved beef meat were reduced immediately by 20-40pc, under a growing quota large enough at the start to cover existing trade.
- The beef safeguard does not apply to beef offal or preserved and prepared beef.