Agricultural Trade Matters, February 2016

​​​​​​​​​​​​​​​Agricultural Trade Matters

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​​​​​​​Agricultural trade matters provides an overview of what the Department of Agriculture and Water Resources and the Australian Government are doing to support international agricultural trade.

This is the most recent edition, published February 2016. The next update is due in May 2016​.

To receive an email notification when future editions are made available, subscribe to Agricultural Trade Matters.

Trade and Investment Minister signs historic Trans Pacific Partnership (TPP)

Trade and Investment Minister Andrew Robb signing the Transpacific Partnership Agreement in Auckland.

The historic TPP – which will see the elimination of 98 per cent of tariffs among 12 countries – was formally signed by Trade and Investment Minister Robb on 4 February 2016 in Auckland, New Zealand.

The TPP is the world’s most significant trade and investment agreement finalised in more than two decades, with member countries accounting for around 40 per cent of global GDP.

Australia’s exports of goods and services to these countries were worth $109 billion last year – a third of Australia’s total exports. Tariffs will be eliminated on US$9 billion of Australia’s dutiable exports to TPP countries, including $4.3 billion worth of agricultural goods with new levels of access for beef, dairy, sugar, rice, grains and wine. A further $2.1 billion of Australia’s dutiable exports will receive significant preferential access through new quotas and tariff reductions.

Also on 4 February, Trade Ministers from Australia and 11 other countries issued a joint statement welcoming the TPP as an agreement that sets a new standard for trade and investment in one of the world’s fastest growing and most dynamic regions.

For further information, visit the Department of Foreign Affairs and Trade’s TPP webpage.


Making export easier - improving Australia's agricultural export laws

Container ship of Australian exports.

Improved export legislation is being developed to help farmers and exporters make the most of export opportunities and increase their returns. A review conducted by the department in 2015 on the existing legislation found that, while it has served its purpose in maintaining overseas markets, it has become complex and must be modernised to ensure exporters can most efficiently meet future importing country requirements and seize future export opportunities.

Over time, Australia’s agricultural export legislation has become complex as it has expanded to include 21 Acts and over 40 Regulations, Orders and Declarations, with multiple provisions that deal with the same functions. For example, it includes up to 12 sets of provisions for export permits, eight for audits and five different types of licenses.

Over time, Australia’s agricultural export legislation has become complex as it has expanded to include 21 Acts and over 40 Regulations, Orders and Declarations, with multiple provisions that deal with the same functions. For example, it includes up to 12 sets of provisions for export permits, eight for audits and five different types of licenses.

More about improvements to Australia's agricultural export laws...

In addition to facilitating export opportunities for farmers and exporters, new legislation will be easier to understand and apply, and provide more effective enforcement tools to prevent rule breakers from bringing the system down.

Contemporary, flexible and efficient legislation will mean exporters can demonstrate in smarter and simpler ways that our quality agricultural products meet importing country requirements. Improving the legislation will be a significant task and will take place over the next few years. Throughout this process, we will provide updates, continue to consult with stakeholders and work with industry for the best outcomes for our exporters. More information on these changes, including what stakeholders have said, the next steps and how you can get involved, can be found on the department’s website.

This all ties in with wider government initiatives to support a stronger agricultural industry, including the Agricultural Competitiveness White Paper commitment to invest $30.8 million to break down technical trade barriers and increase our food and agriculture exports in overseas markets.



Pushing paperless trade

Officer from the department presenting on electronic certification in Thailand.

The department continues its strong focus on paperless trading for Australian exports. Electronic certification (or eCert) removes the time consuming paper process for certification, allowing for direct government-to-government exchange of export information, streamlining pre-clearance at import country ports and the management of replacement certificates.

The department is building new eCert exchanges with our trading partners, with a focus on Thailand, Philippines, Republic of Korea, Taiwan and the European Union.

This will add to successes made with Canada, China, Japan, the Netherlands and United States, where electronic certification exchanges have been implemented for Australian exports.

For example, in January 2014 paperless trading was introduced for all meat exports to Canada. The move to paperless trading means that Australian Government export certificate information is sent directly from our department to the Canadian Food Inspection Agency.


World Trade Organization levelling the playing field for farmers

Trade and Investment Minister Andrew Robb at the World Trade Organization’s tenth Ministerial Council in Nairobi.

The elimination of agricultural export subsidies was the most significant outcome of the recent World Trade Organization (WTO) Ministerial Conference, held in Nairobi in December 2015. Some countries pay export subsidies to their producers to encourage them to export. Their elimination helps to level the playing field for our exporters. Some of our major competitors, including the United States (US) and the European Union (EU), have to give up their export subsidy entitlements worth over $15 billion per year.

Export subsidies are the most trade distorting form of subsidy, and have been prohibited for non-agricultural products since the 1950s. Getting them abolished has been a core objective of Australian trade policy since the 1970s. Most countries have not used export subsidies in recent years, but when they have in the past it has had a significant impact on our exporters. For example, when the EU last used its export subsidy for beef in 2009, the world price dropped by 15 per cent. Thanks to this agreement, our farmers will not have to compete with subsidised exports from other countries.

More about the elimination of export subsidies...

Most developed countries’ export subsidies were eliminated as of 19 December 2015 (the date of the Ministerial Decision), including those of the US and most of the EU's. Developing countries need to eliminate most of their export subsidies by 2018 or 2023, depending on the type. Countries categorised as least developed or net food importing will eliminate theirs by 2030.

Members also agreed to a raft of other reforms, including: limits on their ability to use export finance programmes in ways that distort agricultural trade; preferential treatment in favour of services and service suppliers in least developed countries; preferential treatment for cotton producing in least developed countries; and expansion of the Information Technology Agreement. For further information on export subsidies, visit the WTO’s website.


Building stronger agricultural ties with Indonesia

An Indonesian Brahman.

Indonesia is an important market for Australian agricultural exports with potential for significant future growth. In 2014, Australia exported $3.3 billion of agricultural products to Indonesia, making it Australia’s fourth largest agricultural export market. The end of 2015 saw some key events and important progress on building our agricultural trade relationship. Read more about...

Indonesia-Australia Business Week

Following the successful visit by ​Minister for Agriculture and Water Resources’, Barnaby Joyce, to Indonesia in October 2015, the Minister for Trade and Investment, Andrew Robb, led a delegation of over 360 senior business leaders to Jakarta to participate in Indonesia-Australia Business Week. Representatives from the Australian agriculture, food and beverage industries benefited from the opportunity to build relationships and explored ways to tap into Indonesia’s rapidly growing market of more than 250 million people.

Australia-Indonesia Working Group on Agriculture, Food and Forestry Cooperation

Opportunities for future cooperation on building agricultural trade with Indonesia were explored at the 19th Australia-Indonesia Working Group on Agriculture, Food and Forestry Cooperation (WGAFFC) meeting held in Canberra in November 2015.

Progress was made on improving conditions for Australian live cattle and boxed beef exports and future opportunities for increasing horticulture imports and exports, including citrus, were discussed.

WGAFFC is an important forum for Australian and Indonesian government officials to identify market access improvements, help facilitate trade, and progress mutually beneficial cooperation.

What Indonesia wants: Analysis of Indonesia’s food demand to 2050

Coinciding with the Australia-Indonesia Working Group on Agriculture, Food and Forestry Cooperation (WGAFFC) meeting was the launch of a new report by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) called What Indonesia wants: Analysis of Indonesia’s food demand to 2050.

The Indonesian Government delegation was interested in the findings of the report, which highlight the potential benefits that the growth of the Indonesian economy has for both Indonesia and Australia. The ABARES report projects that Indonesia will see a significant increase in the consumption of meat, dairy products, fruit and vegetables over the next few decades.

Indonesia-Australia Partnership on Food Security in the Red Meat and Cattle Sector

With the aim of improving long-term investment and trade in red meat and cattle with Indonesia, the Indonesia-Australia Partnership on Food Security in the Red Meat and Cattle Sector (the partnership) delivered some important outcomes over the last 12 months.

In 2015, the partnership supported 70 Indonesians to participate in a skills development programme supported through Australia Awards Indonesia, and the Northern Territory Cattlemen’s Association Pastoral Industry Student Programme. Through the skills development programme, Indonesian undergraduate students and senior industry and government officials were able to interact with key Australian businesses, educational institutions, industry groups and government agencies, gaining valuable insights into the Australian beef and cattle sectors.

In August 2015, the partnership endorsed a further $12.175 million funding for cooperation activities commencing in 2016, with a focus on cattle breeding, meat processing, and skills development. Partnership members discussed how the partnership could influence longer-term trade policy reform in Indonesia, representing a positive step towards building a stronger bilateral relationship.



Australian eggs crack the Taiwanese market

Australian eggs in a Taiwanese supermarket.

The first consignment of 20,000 fresh eggs from Australia arrived in Taiwan in mid-January 2016. In September 2015, officers from the department, the Australian Office in Taipei, and Taiwan’s Bureau of Animal and Plant Health Inspection and Quarantine agency successfully negotiated access for fresh eggs and egg products to be exported from Australia to Taiwan.

Eggs are an important part of the Taiwanese diet; as well as being eaten as part of everyday meals, they are a key ingredient in specialty dishes such as oyster omelette and iron eggs.

Avian influenza detections in Taiwan have seen an increase in the demand for poultry eggs and egg products from overseas.



Minister for Agriculture and Water Resources visits North Asia to promote free trade agreement opportunities

Minister for Agriculture and Water Resources, Barnaby Joyce, promoting Australian produce in a supermarket in North Asia.

Exciting opportunities for expanded agricultural trade were promoted by the Minister for Agriculture and Water Resources, Barnaby Joyce, during his recent visit to China, Japan and the Republic of Korea in November 2015. The visit included leading Australian agricultural industry representatives. Building on the free trade agreements (FTAs) with each country, the visit represented another step in strengthening agricultural ties at both government and industry levels. The industry delegation fostered strong commercial relationships between importers and exporters and a direct understanding of the markets they are setting out to serve.

In China, Minister Joyce signed a ‘Joint Framework on Expanding Cooperation’ with China’s Minister for Agriculture on new agricultural cooperation on technical research and regulatory systems to manage fruit fly and pests of mutual concern to Australia and China.  This will strengthen commodity production and market research, and establish priorities for agricultural policy, food security and fisheries management in the region. 

More about the Minister's visit to North Asia... 

The Minister also met with China’s Minister for Water Resources to discuss how both Australia and China manage this precious resource.

In Korea and Japan, Minister Joyce discussed technical market access priorities with his counterparts. A major focus in Korea and Japan was on creating opportunities for industry representatives to meet at business functions and retail and supermarket events, and explore commercially viable trade together.

These three big North Asia markets account for around US$220 billion worth of agricultural, food and fishery imports from across the world each year. Of this figure, US$120 billion is contributed by China, as the world's second largest importer of agricultural commodities. The agricultural markets of Japan continue to be important, importing US$70 billion each year, and Korea with annual imports worth US$30 billion.

Over a third of Australia's agriculture, food, forestry and fisheries exports go to  these three markets, with exports in 2014-15 worth A$9.6 billion to China, A$4.6 billion to Japan, and A$2.7 billion to Korea. A large part of Australian product goes directly to those countries' food and fibre processing industries, but Australia is also seeing growth in exports of high-end consumer products like wine and seafood to these markets. Minister Joyce noted the enormous potential for further growth, with Australia's current share of agricultural imports into these markets at only six to seven per cent.



Benefits of free trade agreements starting to flow

Minister for Agriculture and Water Resources, Barnaby Joyce, shaking hands with the president of JA-Zenchu (Central Union of Agricultural Cooperatives) Mister Choe Okuno

The benefits and competitive advantages of Australia’s free trade agreements (FTAs) with China, Japan and the Republic of Korea are starting to flow through to the farm gate. The FTAs promote and protect Australia’s competitive position with three of Australia’s top six agricultural trading partners and are critical to growing Australia’s agricultural export markets.

China-Australia Free Trade Agreement

The benefits of the China-Australia Free Trade Agreement (ChAFTA) are starting to flow with tariffs for barley and sorghum completely eliminated on 20 December 2015.  The ChAFTA will also see a rapid tariff reduction on other agriculture exports, including seafood, and a variety of horticulture and dairy commodities.

Signing of the ChAFTA will help improve Australia’s competitive advantage with countries that already have FTAs with China such as New Zealand, Chile and ASEAN. It also provides a significant advantage over major competitors without FTAs with China such as the United States and the European Union.

More than 86 per cent of Australia’s goods exports to China (by value in 2014) now enter duty free thanks to the ChAFTA, and this percentage will rise to 94 per cent by 1 January 2019 and 96 per cent when it is fully implemented in 1 January 2029.

Korea-Australia Free Trade Agreement

The Korea-Australia​ Free Trade Agreement (KAFTA) came into force on 12 December 2014 and is already delivering impressive results for Australian exporters. These started with tariff cuts, followed by an increase in agricultural exports within the first nine months. In practical terms, Australia is now more competitive with those countries that already have a free trade agreement (FTA) with Korea—including the United States and the European Union.

KAFTA secured three rounds of tariff cuts over a short period for Australian exports to Korea — the first round of tariff cuts on 12 December 2014 eliminated tariffs for raw sugar, wheat, wine and some horticulture products, while the third round on 1 January 2016 eliminated tariffs on key seafood (Southern Bluefin Tuna, rock lobster). 

Some horticulture exports to Korea have already soared. Tasmanian cherry exports to Korea have grown exponentially from only $69 000 in 2013-14 to around $3.3 million during the first nine months of 2015 as a result of the commodity’s 24 per cent tariff having been eliminated and the negotiation of a cherry access protocol in late 2014. Macadamia exports to Korea also increased from $3.1 million to $10.3 million in the first nine months of 2015 compared to the same period in 2014 as a result of the tariff being reduced from 30 per cent to 18 per cent. A further reduction of tariffs on 1 January 2016, to 12 per cent, will see exports of Australian macadamias even more commercially competitive into Korea in 2016.

Dairy product exports to Korea have also increased 18 per cent in volume for the first nine months of 2015 ($8.4 million increase) as a result of tariff reductions with processed cheese, butter and dairy spreads up 61 per cent, 106 per cent and 112 per cent respectively. Increasing tariff free quotas and further reductions in the out of quota tariff, will make Australia’s dairy exports to Korea more commercially viable in 2016.

Beef exports to Korea are up 35 per cent in value in the first nine months of 2015 worth $871.5 million as a result of tariffs which have already fallen from 40 per cent to 32 per cent. Importantly, Korea will continue to eliminate its 40 per cent tariff on beef products progressively over 15 years, equivalent to the terms the US received under its trade agreement with Korea, helping to level the playing field for Australian beef exporters.

Wine exports to Korea grew some 25 per cent to a total of 1.3 million litres and almost doubling in value to $12.4 million in the first nine months of 2015.  This is compared to the same period last year, and is the result of the 15 per cent tariff being eliminated.

Japan-Australia Economic Partnership Agreement

Australian agriculture also gained new opportunities under the Japan-Australia Economic Partnership Agreement (JAEPA) which gives a significant advantage over competitor countries in Australia’s third most valuable agricultural export market. Since coming into force on 15 January 2015, JAEPA has benefited Australian exporters with two tariff cuts in quick succession – one when it came into force and the second on 1 April 2015. A third round will come into play on 1 April 2016.

Australian agricultural exports to Japan have risen in the first year of JAEPA’s implementation. For the first nine months of 2015 beef exports to Japan increased by 28 per cent, to the value of $1.4 billion, compared to the same period last year due to reduced tariffs.  The tariffs reduced from 38.5 per cent to 31.5 per cent for chilled beef and from 28.8 per cent to 20-25 per cent for frozen beef—less than the 38.5 per cent tariff faced by the United States.

Several major seafood exports to Japan including abalone, rock lobster, prawns and oysters have seen their tariffs eliminated. As a result shrimp and prawn exports (by value) for the first nine months of 2015 have increased by 84 per cent compared to the same period last year, to be worth $12.3 million.

Horticulture exports to Japan including asparagus, mangoes, macadamias and cherries (for our export season) now face zero tariffs under JAEPA and we have already seen rapid growth in table grapes and mango exports this year. Table grape exports grew from a small base in 2014 to be worth around $7.5 million in the first nine months of 2015.  This has been the result of successful negotiations for an import protocol in 2014, and the reduction of tariffs on table grapes from 7.8 per cent to 6.7 per cent.

Wine exports to Japan have also increased by 18 per cent in value (and 43 per cent in volume) over the first nine months of 2015 to be worth $35 million (compared to $30 million in 2014 for the equivalent period). The tariff for bulk wine (of more than 150 litres) was eliminated when JAEPA came into force and other wine tariffs will be eliminated progressively over the next 7-10 years.



Find out how FTAs could benefit you

Shop front sign stating Australia is open for business.

Throughout 2016, the department is continuing to help producers make the most of the new North Asian free trade agreements (FTAs) through information seminars on FTA opportunities, in partnership with the Department of Foreign Affairs and Trade and Austrade.

For further information visit Austrade’s website.​

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