China leaves dairy tariff on hold despite having the right to double rate
China could have doubled the tariff on Australian dairy imports in October, under the free trade agreement, but has held off doing so.
AUSTRALIAN dairy exports to China appear to be enjoying a pre-Christmas break from an import tariff hike, which should have doubled to 10 per cent in October.
The Weekly Times has confirmed the tariff on Australia’s milk powder exports to China has remained at 5 per cent, despite hitting what is termed the 2020 safeguard trigger of 22,335 tonnes in October.
Under the China-Australia Free Trade Agreement China has the right to double the tariff once exports exceed the trigger, but Federal Government sources have confirmed the communist regime has not imposed the 10 per cent tariff, despite escalating trade tensions.
“To date, the higher MFN (most favoured nation) tariff of 10 per cent has not been imposed,” the federal source said. “If the higher tariff is imposed, the rate will reset to the ChAFTA preferential rate (of 5 per cent) from 1 January 2021.”
One dairy industry leader said an industry group had been formed to liaise with contacts in Beijing to keep an eye on what was going on in China, but was “keeping a low profile”.
“The intel we’re getting is that for the Chinese consumer it’s business as usual,” the leader said. “There’s no discussion on (dairy) imports.”
He said the key message to Australian dairy processors was to diversify their markets.
But across the ditch in New Zealand any call to diversify is far more challenging, given its dairy farmers exported 1.25 million tonnes of milk powder to China last year, and delivered another 804,995 tonnes by the end of September this year.
A NZ Ministry of Foreign Affairs & Trade spokeswoman confirmed China had not been so generous to Kiwi farmers, imposing a 10 per cent tariff on all exports above its 2020 tariff-free trigger of 170,606 tonnes.
Under the NZ FTA with China the tariff-free threshold rises to 179,137 tonnes next year, then 188,094 tonnes and 197,498 tonnes before being removed altogether in 2024.
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