Rural industries are in the spotlight as a big year in international trade looms.
The escalating stand-off between Australia’s largest trading partner, China, and our most powerful strategic ally, the US, threatens to force a stark choice on our exporters.
Will the two superpowers wield their influence through trade, demanding exclusive us-or-them arrangements and effectively forcing Australia to choose between China’s lucrative market and the US’ military protection?
Even if this drastic outcome is reached, the path forward for Australia is clear. Australia must wean itself off China’s $14 billion teat and diversify its trade by forging new links into new growth markets like Japan, Indonesia and India.
Worryingly for beef exporters, Australia’s highest value market on a per kilo basis, EU grainfed quota 481 for no-hormone beef, is under threat as the US flexes its muscle to gain exclusive access for its producers.
The Commonwealth is working on several key free trade deals. India and Indonesia are the most significant for the farm sector.
Asia’s growing middle-class offers an obvious opportunity for Australia’s high quality farm produce, but significant social challenges in India and political challenges with Indonesia have so far proved a barrier to sealing tariff-busting deals.
With more than half of India’s population reliant on farm incomes, politicians struggle to make a case for opening the market to new imports which compete with domestic produce.
And Australia has stumbled on the eve of sealing an FTA with Indonesia, angering the Muslim nation by proposing to move its embassy to Jerusalem.
Meanwhile, Labor’s policy could add a new layer of complexity to forming trade deals.
They have pledged to create new laws for compulsory labour-market tests, and to ban Investor State Dispute Settlement mechanism that gives foreign companies the right to take Australia to an international tribunal to resolve disputes.
But there is optimism around the federal government’s commitment to tackle non-tariff barriers in existing export markets, which are costs imposed on our exports by red tape and regulations.