DESPITE a huge spike in Australian beef exports to the United States this year, it’s looking increasingly unlikely that Australia will trigger the US Safeguard market protection mechanism, built into the bilateral free trade agreement between the two countries.

Safeguard mechanisms (sometimes called Snapback) are built into most of Australia’s free trade agreements with trade partners around the world. They are designed to protect the local industries (in this case, US beef) from unusually large rises in imported tonnage in any given year.

Safeguards have been triggered occasionally over the past few years into markets like Korea, China and Japan, meaning Australian exports for the remainder of the year are exposed to full tariff. The China Safeguard for 2024 is expected to be triggered some time over the next four weeks.

This year’s dramatically higher Australian beef exports to the US have sparked interest in the risk of the US Safeguard being triggered in coming months.

Calendar year to 16 September, Australia’s exports to the US have reached just short of 290,000t, up an incredible 69 percent on the same period last year, as US domestic beef supply starts to decline due to earlier drought impact.

As of 12 September, Australia had used 63.5pc of its 2024 US tariff-free beef import quota. Under the US/Australia FTA, the tariff-free trigger level increases each year, with this year’s figure being 448,214t. That annual rise of about 10,000t to the Safeguard trigger number has provided a lot of insulation against the risk of triggering this year.

With more than 163,000t of quota remaining to be used within the remaining 14 weeks of the 2024 year, it’s now looking extremely unlikely the trigger level will be reached.

The Department of Agriculture Forestry & Fisheries trade website says October 1 is the last day that Safeguard trigger point activation can occur each year, under FTA provisions.

In order to do so, 85 percent of the annual quota most be filled by that date. That would mean volume from Australia would have to reach 380,000t – around 90,000t above where it currently sits, which will not occur.

Australia still has a quota in place for the US, even though beef no longer faces a quota-based tariff into the market. Instead, over-quota product is now subject to a safeguard duty.

The US is easily Australia’s largest volume beef customer this year, with momentum continuing to grow as the year has progressed. August shipments reached 41,000t, 59pc higher than August last year – and 39,500t the month before. Both were the highest monthly volumes seen since 2015.