Agmates Editor Steve Truman writes:
The Australian Federal government will come under enormous pressure from the beef & lamb industry’s to negotiate a free trade agreements (FTA) with South Korea & China. FTA’s are urgently needed to match a proposed USA FTA with South Korea & a recently signed New Zealand - China FTA.
Federal Agriculture Minister Tony Burke (pictured left) is to be congratulated on his proactive visit to Asia and particularly South Korea earlier this month.
However developments in the last week will mean he has a lot of work to do to save Australian beef producers from a potentially disastrous beef trade distortion if the US- South Korea FTA goes ahead.
The USA and South Korea have reached an agreement to lift restrictions US beef imports. If the proposed US-Korean Free Trade Agreement goes ahead Australian Beef exports to our 3rd largest customer will be virtually wiped out unless Australia is able to enter into its own FTA with South Korea.
Australia last year exported more than $800 million worth of beef to South Korea.
US and Australian beef exports to South Korea currently attract a 40 per cent import tariff. Under the US Free Trade Agreement (FTA) that will fall to zero for USA producers within 15 years. This puts Australian Beef exports at an insurmountable disadvantage.
David Inall, (pictured left) Executive Director of the Cattle Council of Australia said
“The main threat posed by the ban’s lifting was that a US-South Korea free trade deal could now become law - which meant dramatic tariff cuts for US beef.”
“It really only serves to reinforce the need for Australia to go down the path of a free trade agreement with Korea,” Mr Inall said.
“It’s imperative that Australia strikes a deal with parity of access otherwise we will be placed at a clear disadvantage.”
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Same deal with Our Friends Across “The Ditch”
A newly signed free trade agreement (FTA) between China and New Zealand will have the same impact on Australian lamb exporters.
China currently imposes tariffs of up to 23 per cent on lamb from Australia and New Zealand, but the latter’s tariffs will fall to zero by 2016 as a result of the new FTA, signed in the week ending 11 April 2008.
Chris Groves, the president of the Sheepmeat Council of Australia, said that with China now the third largest market for Australian lamb, it was important that Australia moved quickly to sign its own FTA with China.
Tony Burke needs to get cracking on moving the Rudd government negotiating a FTA deals with South Korea and China. Negotiating FTA’s are notoriously long and slow processes. The three Key government ministers who will move this along are Prime Minister Kevin Rudd, Trade Minister Simon Crean and Agriculture Minister Tony Burke.
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Update No1 - 23rd April @ 1.05pm
Australia currently accounts for some 95% of the South Korean beef market, this is up from 45% prior to the South Korean ban on US meat in 2003 in the wake of the BSE find in the US. This unchallenged asses to the South Korean & Japanese market has been the key driver behind a resurgence in the Australian beef industry since 2003.
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Update No2 - 23rd April @6.46pm
South Korea Braces For a Dip in Beef prices.
South Korean cattle producers aren’t very happy either. Ahead of the re-entry of U.S. beef into its market, South Korea expects a significant decline in its beef prices.
The Korea Rural Economic Institute (KREI), a state-run agricultural think tank, projects cattle prices to plummet by nearly 14 percent compared with 2007 prices. If U.S. beef imports total 240,000 metric tons, a 20 percent increase over last year, the price of premium beef could fall by as much as 5.7 percent.
If there is a 30 percent increase in beef imports, local beef prices will drop 8.3 percent to 10.4 percent, while beef prices would fall by 11.4 percent to 14.2 percent if 280,000 tons of foreign beef are imported.
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Tags: Beef, Free Trade
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