“EXTREME disappointment” is the reaction from Australia’s dairy farmers, rice and sugar growers to news of the trade agreement struck yesterday with Japan. While the horticultural industry welcomed the news, other agricultural groups say the deal is far from the “free trade” conditions they had hoped for.
Prime Minister Tony Abbott said the Japan-Australia Economic Partnership Agreement (JAEPA) would deliver “a significant boost to Australian farmers”, with better access for key agricultural products – including beef, cheese, horticulture and wine –giving Australia “a head start over our competitors”.
However, the Australian Dairy Industry Council (ADIC) said the agreement fell well short of the industry’s expectations for its “single most important market”.
“There has been no movement in this agreement on fresh cheese – the number one objective for Australian dairy, with tariffs to remain at 29.8 per cent,” ADIC deputy chair Robert Poole said.
“A successful outcome on this tariff line would have delivered approximately $60 million in tariff savings – instead we have received nothing and the tariff stays in place.
“This has been an agreement over six years in the making - and sadly from the dairy industry’s perspective, will end up providing no meaningful benefit,” he said.
Ricegrowers’ Association of Australia (RGA) president Les Gordon said the exclusion of rice not only from the deal but also from any statements about the process was a bitter pill, given that the rice industry had worked closely with the Australian government to develop a range of options in the lead-up to negotiations.
“We strongly supported the government’s efforts to finalise these trade agreements but only if they are comprehensive, and do not exclude any agricultural products,” he said.
President of the National Farmers’ Federation (NFF) Brent Finlay was diplomatic but unenthusiastic in delivering his organisation’s response.
“We recognise the historical significance of the agreement - however, we are disappointed with the overall outcomes for agriculture with a number of sectors facing marginal improvements or limited commercial gains,” Mr Finlay said.
He acknowledged the work involved in securing the complex and ground-breaking arrangement with Japan – which has historically refused to make any concessions on agriculture in international trade deals – but said sector carve-outs had let down Australian farmers.
“The ultimate objective with any trade agreement is to obtain tangible benefits to farmers,” he said.
“Agreements must be comprehensive. That means no sector carve-outs and elimination of tariffs. The Japanese agreement falls short of the mark on a number of fronts in this regard.
“The agreement does not improve - or marginally improves - market access and terms of trade for a number of sectors such as dairy, sugar, grains, pork and rice.
“Securing good deals for agriculture is always a difficult part of any negotiations and it is clearly the case for Japan, (but) given we export 60pc of the food and fibre we produce in Australia, our farmers need good commercial outcomes from future trade negotiations,” Mr Finlay said.
Canegrowers said Australia’s sugarcane farmers felt like they’d been “hung out to dry” on completion of the negotiations, and that limited concessions made for sugar in the new deal did not go nearly far enough.
"There is no improvement in market access for sugar, no improvement in terms of trade and no commercial gains for Australia's export-driven sugar industry, all which in today's international trade environment, should have been a sure thing," Canegrowers chief executive Brendan Stewart said.
"This is the US 2004 free trade failure all over again. There is absolutely no reason that sugar should be cast aside in this day and age. Modern trade agreements have no place for such antiquated, protectionist trade policies singling out particular commodities."
Trade and Investment Minister Andrew Robb said Australia was the first major agricultural exporter to “unlock the very high import duties” that apply in Japan and talked up the benefits to beef and horticultural producers.
“We've seen a very significant reduction in the beef tariffs,” he told ABC radio. “We're going to see a halving of the frozen beef tariff and nearly that on the chilled beef - an 8pc drop in the first year, it's going to give us a very major competitive edge with beef.
“We've got wonderful results on cheese, we've got a whole range of horticultural products, almost all horticultural products where the tariffs and quotas and all the rest will be eliminated.”
Sam Lawrence, Australian Pork Limited senior policy adviser, said the agreement was "substandard" and represented a "missed opportunity" for the pork sector.
"Exports will remain largely as cost-prohibitive as they are today because of high levies and surcharges," Mr Lawrence said.
ADIC said Japan was the single most important market for the Australian dairy industry, with $511 million in exports in 2012-13, or 19pc of our dairy exports by value.
Under the terms of this agreement, the Australian dairy industry will save just $4.7 million in the first year of its implementation rising to an estimated $11.6 million by 2031, out of a total export market of $511 million. This equates to just 0.1 of a cent per litre for Australian farmers in 20 years’ time, ADIC said in a statement.
“While Most Favoured Nation status has been put in place for cheese in Trans Pacific Partnership (TPP) agreements, the exclusion of all other product lines leaves us vulnerable to one of our competitors reaching a more wide-ranging deal with Japan - that could leave the Australian dairy industry worse off,” Mr Poole said.
“We were hopeful the government had heeded the industry’s message in regards to freeing up market access in Japan, however it now appears our words fell upon deaf ears.”
Mr Gordon and Mr Poole called on the federal government to urgently address the issue of access to the Chinese market for rice and dairy instead.
“Australian rice technically already has access to the Chinese market under World Trade Organisation rules but we have been waiting for protocols to be finalised for more than six years to actually gain access,” Mr Gordon said.
Mr Poole said the Japan deal “sends all the wrong signals to our key trading partners” and was particularly troubling in the context of the upcoming free trade negotiations with China.
“As we seek to grow dairy exports to China we have one opportunity to get a China trade agreement right - and it’s time for the federal government to recognise the potential in dairy food export growth and prioritise this in trade negotiations.”
Mr Stewart said the deal with Japan leaves Trans Pacific Partnership machinations in “a questionable position” for sugar.
"From what was our most important market a decade ago, access to our near Asian market is withering, when all indications were that this would be the agreement that would mark a turn in the tide for fair trade," he said.
Shadow Agriculture Minister Joel Fitzgibbon said if the responses of the NFF and the Cattle Council were anything to go by “then we should be concerned about the outcome for agriculture”.
Even the beef sector – said to be one of the JAEPA’s winners – was lukewarm about the outcome.
Chairman of the Australian beef industry's free trade taskforce Lachie Hart said the deal would be worth $5.5 billion to the Australian industry over 20 years and would create “opportunities for increased Australian beef sales into Japan and improve the affordability of beef to Japanese consumers”.
Tariffs on Australian frozen beef will drop by 8pc in the first year, and for chilled will drop by 6pc, representing a “major change in the trading environment to Japan” in the first year of the agreement, Mr Hart said.
However Cattle Council of Australia president Andrew Ogilvie was less enthusiastic, saying he was disappointed tariffs would remain on Australian beef.
While tariffs would remain, Mr Robb said almost half the negotiated tariff cuts would occur in the first two years, giving the Australian beef industry the jump on every other beef exporter in the world - “and particularly the American market, which is great exporter and competitor in Japan for this meat market”.