Urgent ratification of trade agreement needed

NSW Farmers has written to two federal parliamentary inquiries seeking immediate ratification of the recently concluded Korea-Australia Free Trade Agreement (KAFTA).

Negotiations with Korea on the agreement concluded in December and the agreement was signed in April but it now has to be ratified by the parliament of both nations before it enters into force.

NSW Farmers believes the economic opportunities provided by KAFTA are substantial for many of our nation’s major agricultural industries and particularly for dairy, sheep meat and cattle. However, in order to maximise the benefits from KAFTA to Australian producers, it is vital the agreement enters into force in 2014.

Entry into force in 2014 will see tariff cuts on Australian exports begin immediately, substantially improving the position of Australian goods against our major competitors in the Korean market place. The beef industry provides the clearest example of the financial and economic imperative for immediate ratification.

Under KAFTA, Australian beef producers will see tariff reductions for exports into Korea from 40 percent to zero across a 15 year period, allowing unfettered access to a large beef consuming nation.

However, in 2012 the United States, a major competitor in the Korean beef market, secured an identical agreement with Korea which means tariffs on US beef are currently 8 percent lower than on Australian beef. If KAFTA does not enter into force until 2015, this 8 percent difference will remain across the 15 years it takes to phase out tariffs on Australian beef.

NSW Farmers’ Cattle Committee Chair Derek Schoen, a beef producer from Guyra, said that if immediate action is not taken to reduce this differential, it will result in lower exports of Australian beef, lower returns to Australian producers and lower economic growth for the Australian economy. But if KAFTA came into force in 2014, the difference would be reduced to 5.4 percent.

“While notionally very small, achieving this reduction would make an enormous difference to the competitiveness of Australian beef products in Korea across the 15 year tariff elimination period,” he said.

“The flow on effects would help to sustain profitability and growth in the Australian beef industry, the vitality of rural Australia and the growth of the Australian economy as a whole.” 

Both the Joint Standing Committee on Treaties and the Senate Foreign Affairs, Defence and Trade References Committee are presently conducting inquiries into the FTA.

NSW Farmers is fully supportive of the work that National Farmers’ Federation has done on this issue and will continue to work with NFF on securing trade agreements for its producers.

13 June 2014 
 

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Contact: Duncan Bruce-Smith

Phone: 02 9478 1008

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