Trade

Korean Safeguard market protection mechanism will see beef tariffs rise

Beef Central 17/10/2024

AUSTRALIA is within days of triggering its South Korean imported beef safeguard mechanism, meaning our exports for the remainder of 2024 will attract a 24 percent tariff.

As of Monday, Australia had used more than 96pc of its 2024 preferential beef safeguard into Korea, with just 7378 tonnes shipped weight remaining.

Under the Korea-Australia Free Trade Agreement, Australia can export 188,437t of beef to Korea this year at a 10.6pc duty. After the safeguard is triggered, the duty will jump to 24pc for the rest of the calendar year.

Safeguard mechanisms apply in most larger customer countries with which Australia has Free Trade Agreements, designed to protect local industries from unusually large rises in imported product volume.

Rising Australian beef export volumes to most markets this year have already, or are threatening to, trigger Safeguard provisions in key export markets including China, the United States and Thailand.

What it means for Australian beef exports

Australian product shipped prior to the point of the safeguard trigger which has yet to clear customs, will be allowed to enter Korea at the lower tariff rate – although this ‘excess tonnage’ will be counted against the 2025 safeguard volume. The 2025 safeguard trigger will increase to 192,206t, minus the 2024 ‘excess’.

Next year, the tariff applicable to Australian beef exported to Korea will drop to 8pc.

For the calendar year to the end of September, Australian exports to Korea had reached 143,000t.

The impending safeguard tariff increase will place Australian beef exports at a further disadvantage compared to US product entering under the US-Korea Free Trade Agreement, with the tariff differential between Australia and the US increasing from 5.3pc to 18.7pc for the remainder of 2024.

While the Korean safeguard trigger level has increased gradually since the free trade agreement was struck in 2014, it has been triggered every year except 2022 when the Korean government waived it as a post-pandemic stimulus recovery measure.

In 2020, the trigger volume was reached on 25 November, in 2021 it was on 22 November and in 2023 it was on 11 December. This year, the beef safeguard will be triggered earlier, partly due to the reduced US export beef supply.

The safeguard will be entirely phased out in 2029.

Korea has also been experiencing some challenging economic circumstances post-pandemic, leading to reduced discretionary spending. This has caused a shift from dining out to cooking at home, increased demand for cheaper beef products and cuts, as well as switching to cheaper proteins.

The week-long Chuseok public holiday from 14–18 September saw strong sales of Australian beef, particularly through retail. Additional public holidays on October 1, 3 and 9 have helped increase beef sales, especially within the food service sector.

 

 

 

 

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