China FTA: farmers to reap double value from tariff cuts

Australian farmers hope the value of their food exports to China will double through the free-trade agreement.

Australian farmers hope the value of their farm produce and food exports to China will double as the full benefits of big tariff reductions in Australia’s first free-trade agreement with China start to be delivered.

The FTA phases out and eventually eliminates tariffs that have added as much as 30 per cent to the price of some fresh Australian produce available to Chinese consumers, including beef, dairy, lamb, seafood and fruit.

China is Australia’s largest and fastest-growing market for agricultural exports, jumping from $7 billion three years ago to $9bn last year, as Chinese consumers buy more and better quality food.

The tariff cuts, which will be phased in over the four to nine years starting from late 2015, put Australian food exports on the same or a more competitive footing as their New Zealand and Chilean rivals.

But the broad delight in the rural community yesterday at the formal signing of the China-Australia FTA was tempered by the omission of key exports, including sugar, cotton, wheat and canola, from the tariff-reduction regime.

Trade Minister Andrew Robb said the review of the FTA in three years provided an opportunity for omitted exports to be embraced in a wider deal.

In just the first year of tariff cuts in 2016, it has been estimated the FTA will provide tariff savings of up to $188 million a year across Australian commodities.

Agriculture Minister Barnaby Joyce said the deal marked the beginning of a new relationship with China, which will be used to press for improved market access for all producers and exports.

“(This deal) closes the gap between Australia and international competitors that already have FTAs with China,” he said.

National Farmers Federation president Brent Finlay labelled the agreement an “enormous achievement”.

Cattle Council president Howard Smith said the 12-25 per cent cuts over nine years to Chinese tariffs on beef would improve annual returns to Australian cattle farmers by $270m, as well as kickstart a live cattle export trade of a potential one million cattle a year.

But Canegrowers Australia chief economist Warren Males said it was a disappointing day for sugar growers, with tariffs of about $35 a tonne imposed on sugar sold to China.