Farmers will start seeing tariff cuts on a series of agricultural produce including beef and sheep soon following the finalisation of the China-Australia Free Trade Agreement.
Minister for Trade and Investment Andrew Robb this week announced the agreement, which was signed by both parties back in June will finally take effect from December 20 after both countries have fulfilled their respective domestic requirements.
Robb says this is a very significant moment for the government.
“This will deliver a very material early harvest for our exporters in the form of two rounds of annual tariff cuts in quick succession,” he says.
“The first round of tariff cuts will occur on December 20 followed by a second round on January 1 2016.”
He adds the agreement will save exporters hundreds-of-millions of dollars in extra tariff payments in the next year alone.
“The National Farmers’ Federation estimates our agriculture sector alone is set to save around $300 million,” he says.
According to the agreement, tariffs will be progressively abolished for Australia’s $13 billion dairy industry.
Beef and sheep farmers will benefit from the phased abolishment of tariffs ranging from 12-25 per cent in the livestock industry.
All tariffs on Australian wine and horticulture will also be eliminated.
In addition, Robb expects an extra 600 to 700 dairy jobs to be created in the first year alone.
The National Farmers Federation (NFF) welcomes the announcement and congratulates Robb, government officials involved and the Australian Embassy in Beijing on successfully finalising the historic agreement.
NFF president Brent Finlay says the quick succession of tariff cuts would greatly improve the competitiveness of Australian agriculture and would deliver vast benefits to Australian farm businesses and the broader supply chain.
“For example, the current tariffs imposed on Australian beef, sheepmeat and co-products exported to China represent an annual tax on the supply chain in excess of $800 million,” he says.
“The gradual removal of this cost burden will positively impact the profitability of Australian cattle and sheep producers, processors and exporters.
“It will also alleviate the inflated prices paid for Australian red meat and associated products by Chinese customers and consumers.”
Once the FTA takes effect, more than 86 per cent of Australia’s goods exports to China will enter duty free, rising to 96 per cent when the agreement is fully implemented.
Consumers are also expected to benefit from more affordable Chinese goods such as electronics, clothing and other household items as tariffs of these products will be removed.