AUSTRALIA’S dairy industry will receive an advantage over key rivals New Zealand and the United States in dairy exports to Japan under the free trade agreement struck this week with about half of Australian cheese exports admitted duty free.
Detail of the agreement, obtained by The Australian, shows Australia will receive “significant preferential access, particularly on our key dairy export cheese, as well as ice cream, and yoghurt’’.
The details have emerged as the dairy and sugar industries have criticised the deal for not going far enough for their sectors.
The deal also secured a 50 per cent cut in the ice-cream tariff down to between 14.9 per cent and 10.7 per cent over 10 years under a quota going from 180 tonnes to 2000 tonnes. There was a 50 per cent reduction in the frozen yoghurt tariff, down to 14.9 per cent over 10 years under quota doubling to 200 tonnes.
The documents argue sugar growers also receive potential benefits, albeit in a category of sugar they currently don’t sell to Japan.
Most international sugar trade is in so-called high polarity sugar but because of the tariff regime Australian exports to Japan are in low-polarity sugar which is of a lower quality.
Japan currently imposes a tariff of 22c/kg on high polarity sugar plus a levy that varies, according to market conditions, of 42c. This imposes a total tariff of 105 per cent on sugar imports.
Under the deal the 22c/kg tariff on high polarity sugar will be immediately eliminated and the levy will be reduced from 42.6c/kg to 41.7/kg when the deal comes into force. This will reduce the effective tariff from 105.8 per cent to 67.8 per cent.
The government argues this will provide greater flexibility for Australian producers and will allow Australia to sell the same standard of sugar to Japan as they sell to other markets.
The deal also offers an export boost wheat with the tariff of 56c/kg on feed wheat eliminated. Traditional wheat will also receive preferential treatment, meaning they will no longer have to participate in a tender process that is part of World Trade Organisation quotas but will have access to the more efficient “simultaneous buy and sell’’ process.
Key agricultural products including beef, wheat, sugar and dairy which represent 66 per cent of Australia’s agricultural trade will be granted a renegotiation of terms should another country ever receive better access, and the two countries will go back to the table on the deal in five years regardless.
A government source said the priorities that were advised by the industries were featured in the deal.
The source said for the key stakeholders in dairy and beef there should have been “no surprises, they had been consulted and they knew have difficult it is to make gains in the Japanese market’’.
Some areas that are currently small markets or non-existent markets “can grow significantly’’, but it was in industry’s hands.
“Anybody who is genuine and knows anything about Japan’s trade history knows this is a very good deal, and has broken new ground.
“After six years of nothing it is perplexing how some sectors of the agricultural industry could take such a short sighted view,’’ the source said.
The Australian Dairy Industry expressed “extreme disappointment’’ at the deal which would save the industry just $4.7m in the first year, rising to an estimated $11.6m by 2031.
Canegrowers chief executive Brendan Stewart said sugar growers were “bitterly disappointed’’.
Source: The Australian
