December 10, 2013

FTA to boost Australian beef and sheep meat exports to South Korea

Australia's successful negotiation of a Free Trade Agreement (FTA) with South Korea will boost Australia's meat industries, with the gradual removal of tariff on Australia's beef and sheep meat.

"The successful negotiation of an FTA with South Korea which is equivalent to the US in terms of tariff reductions, and sees the removal of the current 40% tariff over 15 years, has been a priority for the Australian beef industry for a number of years. It also sees the phasing out of the 22.5% sheep meat tariffs over 10 years," said Stephen Kelly, the spokesman for South Korea Taskforce

Ministers Robb and Bishop and the coalition government have managed to fast-track negotiations and secure the agreement for Australia in a matter of months. This will potentially save the Australian beef industry US$1.25 billion over the next 15 years, he added.

He also said that the agreement is extremely positive and will help secure the on-going supply of Australian beef for Korean consumers in a highly competitive global protein market. However, the fact that the US secured their FTA in 2012 means there will always be a tariff differential between Australian and US product of up to 5.3%, he said.

Kelly expressed concern that volume safeguard conditions contained in the agreement may be restrictive. "Safeguard conditions in the agreement can mean that tariffs increase if export volumes exceed a certain level. However, the industry notes that these safeguards are not applied automatically and is of the belief that they should be applied judiciously and not to constrain natural increases in trade," said Kelly.

Kelly said the next priority is to ratify the agreement as soon as possible as the tariff differential between Australian and US beef into South Korea grows to 8% by January 1, 2014.

Australia has a reputation as a reliable supplier of clean and safe quality beef for Korean consumers. In 2012-13, it was Australia's third most valuable export market with 137,695 tonnes of beef worth US$641 million exported to South Korea. The Australian market share of beef imports was 54%. However, this share has been under threat by US beef, aided by their preferential tariff.