July 2, 2020
Tariffs on Australian beef exports to China increase after fulfilment of beef quota under trade agreement
Tariffs on Australian beef imported into China have increased, and the same could happen for whole milk powder later this year, ABC News reported.
According to Australian meat analyst Simon Quilty, the duty on beef would spike from 4.8% to 12% this week for the remainder of 2020.
Under the China Australia Free Trade Agreement (ChAFTA), preferential tariffs are withdrawn once a Special Agricultural Safeguard (SSG) is triggered. The safeguard was calibrated to 179,687 tonnes of beef, which was fulfilled on June 30.
Despite Australia triggering the safeguard for the past two years, a spokeswoman from the Department of Agriculture said that June was the earliest that preferential tariffs have been dropped since CHAFTA was established in 2015.
"The unprecedented growth of Australian beef meat exports to China in the year to date means that the volume has reached the threshold already this year," the spokeswoman said. "Forecast data shows the SSG for whole milk powder is likely to be triggered later this year also."
Australia's beef sector has already felt the impact of the higher tariffs, Quilty said. Tariffs for the country's beef exports to China is 12%, similar to Brazil, Argentina, Uruguay and Canada, while "New Zealand and Costa Rica are now on zero tariffs [into China]," he added.
As a result of the increased tariffs, importers in China have requested for a renegotiation of contracts with Australian exporters or, in some cases, seeking to cancel them, Quilty noted.
"The ability of the Chinese importer to pass this higher cost duty forward to the consumer in China is almost impossible. The economy in China is struggling and we're finding lower prices each day for meat products, right across the board," he said.
The preferential tariffs will be reinstated from January 1, 2021 before being completely removed under ChAFTA from January 1, 2024.
- ABC News