Free trade is rarely such

The Land Column
Bill McDonnell
Chair - Business Economics and Trade Committee

The colloquial term free trade seems to be a bit of a misnomer these days, particularly in light of the recent “economic partnership agreement” between Australia and Japan that was announced last week.

Governments and departments have been working on this agreement for years. Our national body National Farmers Federation and peak industry bodies have actively been engaged with their counterparts and foreign governments arguing the case for agriculture.

However it is all a negotiation and at the end of these processes we sometimes question what the gains actually are and why we didn’t get more.

Being the lowest supported agricultural nation in the world we have the capacity to compete with any other producers, we just need access to markets.

The problem is that many of our trading partners have very protected industries and politics plays a huge part in protecting their markets. At the end of the day however it is their governments and their consumers that are paying the price, either in the form of producer support or as consumers with higher prices.

The Japan agreement is definitely a step in the right direction. It is the first agreement between a developed country and Japan, and it provides some significant gains for the beef industry.

The move on beef was also encouraging as it was one of the five identified agricultural products that that were ruled out of negotiations by the Japanese parliament early in the discussions.

The $1.4 billion in Australian beef exports currently incur a 38.5% tariff. Under the agreement this will be reduced to 19.5% on frozen beef and 23.5% for fresh beef. We also achieve equivalent treatment if Japan does another deal with another country.

However for the other agricultural products the agreement is frustrating.

For dairy the focus was on cheese but what was not spelt out is that there was no movement on fresh cheese with tariffs to remain at 29.8%.

Some commentators are stating that the agreement is no real step forward in that it was considered to be the general offer Japan was looking to put on the table as part of other negotiations such as the Trans Pacific Partnership and that by signing up we are indicating a degree of acceptance.

But then again we have the agreement, they don’t. The other negotiations are yet to conclude and anything could happen.

Trade negotiations are by no means clear cut but given the potential benefits we could realise, they are something we must keep pursuing.

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