March 8, 2012

 

Unsuccessful Australia, South Korea trade talks upset beef industry

 

 

A disaster for Australia's beef exporters was the result of Australia's failure to reach a free trade agreement with South Korea, Iain Mars, who manages the nation's biggest beef processor, JBS Swift Australia, said Wednesday (Mar 7).

 

Negotiations with South Korea haven't concluded but the fact that an FTA hasn't already been signed is "a total disaster for our business," Mars told an agricultural conference.

 

Australia exported 146,347 boneless tonnes of beef to South Korea in 2011, valued at AUD775 million (US$821 million) free on board, making Australia South Korea's largest source of imported beef and making South Korea Australia's third-biggest beef export market, according to data from industry marketing concern Meat & Livestock Australia Ltd.

 

South Korean importers could already be holding off buying Australian beef. The nation's February imports of Australian beef fell 38% on year to 9,556 tonnes.

 

South Korea has been a prime market for JBS beef exports from Australia, Mars said.

 

JBS is especially concerned about the free trade agreement between South Korea and the US that takes effect March 15. Under that agreement, South Korea's tariff on US beef imports will immediately drop by 2.67 percentage points, and fall to zero over 15 years, giving US beef exporters a competitive advantage over their Australian competitors.

 

Lower South Korean tariffs on US beef are "a real threat" to beef exporters in Australia, who are already suffering from a high cost base and a relatively strong currency, Mars said.

 

Australia previously rejected South Korea's offer to reduce tariffs on Australian beef over 18 years to zero from 40% now--an offer that was made despite strong opposition from South Korea's domestic beef and cattle industry.

 

"Industry did themselves no favours," Mars said. "We were very vocal but we should have accepted a deal."

 

Australia needs to restart negotiations and sign an agreement as soon as possible, he said. JBS Swift is Australia's largest meat processor. It operates 11 processing plants and six feedlots along Australia's eastern seaboard.

 

Brazilian-based meat processor JBS S.A. (JBSAY) is the world's largest producer, while Australia, the US and Brazil are the world's largest beef exporters.