Trade

Tariff on Australian beef to China doubles from Aug 17

Jon Condon, August 19, 2019

CHINA has lifted tariffs on eight important categories of Australian imported beef, after Australia triggered its 2019 annual beef quota to China following booming trade volumes this year.

From August 17 (last Saturday) China has doubled the quota applying to Australian beef from 6pc to 12pc, after the two nation’s Free Trade Agreement country’s safeguard provision was triggered. The triggering came about two weeks earlier than some stakeholders had anticipated.

The higher tariff rate applies for the remainder of the 2019 calendar year.

Beef Central foreshadowed the tariff rise in this story, published on 6 August.

MLA Technical Consultant Calvin Gung, from Taiwan, and Singapore-based MLA chef and consultant David Carew, on the job at beef cooking demonstrations in China.

Under the 2015 free trade agreement between China and Australia, imports of chilled and frozen beef cuts carried a 6pc tariff, while carcase beef was charged at between 10-12.5pc – both lower than the ‘most-favoured nation’ rates.

In July China for the first time became Australia’s single largest export beef customer by volume, taking a record 28,214 tonnes of chilled and frozen Australian beef. In fact China shipments accounted for almost 25pc of Australia’s entire July export beef trade.

Trade sources told Beef Central that a number of factors were behind the dramatic spike in trade, but by far the most significant was looming changes to tariffs on beef imports.

At the time the FTA agreement was signed in 2015, nobody anticipated that Australian beef trade into China would grow as rapidly as it has.

The China quota level actually triggered last year for the first time, but it happened during mid-December, meaning the higher tariff applied for only a couple of weeks.

This year is a different story, however. With calendar year volume into China already reaching 146,244 tonnes to the end of July – a 65pc rise on the same period last year – Australia’s 2019 quota of 172,400 tonnes was filled by mid-August an online notice posted by China’s General Administration of Customs office said.

Little likely impact on demand

An Australian export meat trader who does extensive business into the China market anticipated that the rise in tariff would have little impact on the trade for the balance of the year.

“August volume might be down a little, because importers were racing to gather as much stock as possible around them in July to avoid the tariff rise,” he told Beef Central.

“It might take a few weeks to clear that surplus, but after that, I’d expect it will be business as normal.”

The trade contact anticipate that Chinese customers would bear most of the impact of the tariff jump in Australian beef, due to the continued strength of demand.

“China has kept buying all year, because it has needed meat. And that’s regardless of where it has come from – Australia, South America or New Zealand.”

“By October, Chinese buyers will start to build stocks again in readiness for Chinese New Year, so there is strong demand ahead. Any impact from tariff change is likely to be only a hiccup,” he said.

 

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