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February 11, 2019

US demand for bigger share of EU's beef import quota threatens Australia's exports


The US' unilateral push for so-called fairer trade deals could impact Australia beef industry, with more than $100 million of annual exports under threat from this action, according to a Financial Review report. 


This is due to the US' plan to get a very large share of the EU's import quota for high quality grain-fed beef - a move that will drastically curtail Australia's ability to deliver beef to Europe. Such a demand is part of US President Donald Trump's efforts to fight back what he sees as unbalanced and unfair trade with some nations.

Australia expressed concern that the US' desire to have some of the quota automatically set aside for US exporters would upset a level playing field as required by WTO rules.

In light of the challenges Australia will face, the European Commission should "consult with Australia, as a substantial supplier," Josh Anderson, the European business manager at Meat & Livestock Australia, said. He pointed to the absence of a "formal consultation, despite "the EC indicating they're close to an agreement with the US."  


Anderson furthermore feared "a breach of WTO rules that would discriminate against" Australia and asked for the government to support the local beef sector.


The US and Australia, as well as Argentina, Uruguay and New Zealand, currently contribute to the EU's annual quota of 45,000 tonnes of grain-fed beef quota, with the products delivered tariff-free. Only beef that are shipped outside this quota are imposed with high tariffs.

Australia has its own, separate individual quota with the EU of 7,150 tonnes (which attracts a lower tariff, rather than a zero rate), but the amount Australia exports via the shared quota is typically double that, the Financial Times explained.

If the US succeeds in dominating the full shared quota, Australia's $238 million of annual exports to the EU could plunge by up to two-thirds.

One way to mitigate this problem is for Australia to obtain its own, bigger beef quota through its FTA with the EU, a deal that is still under negotiation, Anderson said.

In the meantime, Simon Birmingham, Australia's Trade Minister, said that he will raise the issue with EU officials, while also commenting that a hindrance to Australia's market access would affect the country's FTA talks with the EU.

"Australia's views are well-known on the importance we attached to the existing high-quality, hormone-free beef quota," he said in a speech at a Belgian think tank.

"Substantial dilution of this access would run counter to the ambitions we claim to share for our FTA negotiations. Put simply, reducing access in a key existing market is no place to start negotiations of an FTA."

Nevertheless, one key obstacle - the US' demand that the EU abrogates its requirement for hormone-free beef - appears to be stalling a potential agreement between both parties. 

The five-way quota imbroglio is also compounded by additional uncertainty over Australia's country-specific quota. The UK and the EU are proposing to split this between them after Brexit, which could reduce the ability of beef exporters to move flexibly between the two markets, and may make some shipping uneconomic, the Financial Times report stated.

Australia has objected to this plan at the WTO, but negotiations are likely to take months if not years to resolve – whereas the quota-splitting plan could come into force as soon as March 29.

- Financial Times

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