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Korean beef trade under threat

14 Nov, 2012 07:38 AM
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THREE peak councils of the Australian beef industry are warning the $770 million Korean beef export market is at risk if the Gillard Government fails to close the deal on a free trade agreement soon.

In a joint statement released on Tuesday, Cattle Council of Australia (CCA), Australian Lot Feeders' Association (ALFA) and the Australian Meat Industry Council (AMIC) urged the government to "act decisively" on completing the Australia-Korea FTA (AKFTA) or risk millions in lost trade and thousands of jobs at home.

Representatives from the three councils have just returned from Korea after holding discussions with key importers and retailers of Australian beef who they say are fed up with the costs the delays are having on their businesses.

According to the group, talks on the AKFTA have stalled over the Gillard Government's insistence that an Investor State Dispute Settlement (ISDS) mechanism in the agreement be excluded, which the Koreans want incorporated as part of the deal.

Nippon Meat Packers director and AMIC representative Stephen Kelly said the impasse was not a "cost free exercise for our sector".

"Business interests in Korea have confirmed Australian beef industry fears that the delays in the AKFTA negotiations will have a disastrous effect on beef sales into Australia's third largest beef export market," he said.

"Australia's market position will dramatically decline from 2013 unless Australian beef is able to compete on comparable tariff terms as US beef."

Problems with the progress of the AKFTA were flagged back in April, with Trade Minister Craig Emerson assuring anxious exporters that negotiations were "well advanced".

Dr Emerson, who is due to speak in Brisbane this morning, said at the time that "sensitive issues" were on the table, such as access to Australia for Korean

cars and access to Korea for Australian beef.

"There is much good will on both sides, and now the FTA with the US has entered into force, progress can be made on the few remaining issues," Dr Emerson told Fairfax Agricultural Media in April.

"We are working to address the competitive disadvantage facing Australian beef exporters and consulting closely with Australian industry on this."

This week's statement from three heavy-weight groups of the Australian beef industry suggest patience with the Gillard Government's focus on the AKFTA is wearing thin, citing massive losses on-farm, in the feedlot and the processing sectors if the opportunity is lost.

Already struggling against a high Australian dollar and resurgent US export supply on the back of the long US drought, Australian exporters are bracing for January 1 next year, when US beef exported to Korea will have a 5.3 per cent tariff advantage (a preferential tariff of 34.67pc compared to 40pc for Australian beef) under the Korea-United States Free Trade Agreement.

The tariff differential widens by a further 2.66pc on January 1 each year, with US beef entering Korea tariff free in 2026.

Mr Kelly said it was critical that the Australian and Korean Governments return to the negotiating table as soon as possible to iron out the differences on the ISDS clause.

"The Australian Government has just released ts Australia in the Asian Century White Paper where it indicates that: free trade agreements give concrete benefits and help agriculture and food exporters to compete on equal terms," he said.

"The Australian beef industry is urging the Government to act decisively and work on implementing the vision outlined in its White Paper by completing the Australia-Korea FTA."

Korea is Australia's third largest beef export customer. In 2011 Australian beef exports to Korea totalled 146,347 tonnes, representing 15pc of Australia's global beef exports, worth more than over A$770m.

Modelling by the Centre for International Economics indicates that the Australian beef industry will incur a cumulative loss of about A$1.4 billion over the 15 years the tariff on US beef is reduced to zero (assuming no similar tariff treatment for Australian beef). This will see Australia's share of the imported beef market in Korea falling from the current 49pc to only 26pc by 2026.

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READER COMMENTS

Jen from the bush
14/11/2012 3:34:09 PM

Come on Lee and AA and Get Real and all your mates. Better get the meat flowing otherwise LE will be the only meat market.

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COMMENTS

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Sorry Chops, but the reality is already here, we have been relegated to a nation of price takers
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I am in Dubai at the moment staggered by the price for Australian beef at any one of hundreds
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Rob an underpinning principle of a spot market that needs to be embedded is that the producers