China tariff cuts in time for Christmas

24 Dec, 2015 01:00 AM
Beverley prime lamb producer and Sheepmeat Council of Australia president Jeff Murray welcomes tariff reductions.
Beverley prime lamb producer and Sheepmeat Council of Australia president Jeff Murray welcomes tariff reductions.

THE red meat sector has welcomed the first tariff cuts over the weekend, as the China-Australia Free Trade Agreement (ChAFTA) came into force.

The gradual removal of the cost tariff burden will improve the profitability of Australian cattle and sheep producers, processors and exporters, and alleviate the inflated prices paid for Australian red meat and associated products by Chinese customers.

The historic deal was negotiated over the course of a year and was signed almost six months ago.

Beverley prime lamb producer and Sheepmeat Council of Australia president Jeff Murray said there was a big diplomatic and bureaucratic push to enact the tariff cuts before the end of 2015.

"It is a positive for industry that this has been the case," he said.

"We will have the initial tariff cuts now and on January 1 we will get the next one.

"It means we will virtually be getting a double-whammy in the tariffs in the first month and a half.

"It was always the push to try get the federal Parliament to recognise it, so that it got through this year, if it didn't we would have had a cut next year and then the following year, so we have basically brought it forward a year."

Mr Murray said China was an important market for WA, especially for the sheep industry.

"It is worth a lot," he said.

"The Chinese have always brought the cuts that we have had difficulty selling, at a good price.

"They have been hard to sell, so this market is a really great option for us for the lesser-cuts."

The tariff for live animals was 10 per cent, but on December 20 was reduced to 8pc.

On January 1, the tariff will further reduce to 6pc and in 2019 it will fall to zero.

Beef dropped from 2pc to 10.8pc on December 20, and falls to 9.6pc on January 1.

Further reductions will occur each year until the tariff is eliminated in 2024.

Sheep meat was at 15pc but was reduced to 13.3pc and will be 11.7pc in January.

Offal was reduced to 10.5pc from 12pc and will reduce to 9pc in the new year.

Mr Murray said congratulated Federal Trade and Investment Minister Andrew Robb for his work.

"We appreciate all his efforts," Mr Murray said.

"He has been a key driver in making sure this happened."

MLA said that once fully implemented ChAFTA has the potential to boost the gross value of beef production by $270 million annually by 2024. Total benefits for beef by 2030 will be about $3.3 billion.

The Australian Red Meat ChAFTA taskforce chairman David Larkin thanked Mr Robb and Department of Foreign Affairs and Trade officials in Canberra and the Australian Embassy in Beijing for their combined efforts in achieve ChAFTA prior to the end of 2015.

"The benefits flowing from ChAFTA will add significant value to the Australian red meat and livestock industry and complement the gains derived from the other FTA Australia has concluded to date," Mr Larkin said.

"The quick succession of initial tariff cuts will greatly improve the competitiveness of Australian product – particularly as sheepmeat products from New Zealand will be duty free from January 1 and other beef suppliers have recently secured improved access."

For the sheepmeat sector, the potential benefits will be more than $150m each year by 2024 – with the value over the next 16 years being in excess of $1.8b.

China is also the destination for nearly 90pc of Australia's sheepskin exports and 80pc of cattle hides, so elimination of these tariffs, as well as those on offal, will add $436m a year by 2024 across beef and sheepmeat – and by 2030 these benefits could total $6b.

China is Australia's largest agriculture export market valued at $8b in 2014 with dairy exports worth $347m and beef exports $655m.



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