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Stalled FTA with Korea may cost Australia billions in exports

6 March 2013

Australian beef producers stand to miss out on $1.4 billion in exports to Korea because of our stalled free trade agreement (FTA), National Farmers’ Federation (NFF) President Jock Laurie said today.

Speaking from Seoul where he is meeting with key Korean officials to agree an urgent approach to restarting negotiations, along with representatives of the Cattle Council of Australia, Australian Meat Industry Council and Australian Lot Feeders’ Association, Mr Laurie said the threat to other agriculture exports like wheat (around $350 million) and dairy (over $100 million) was also pronounced.

“Total losses to Australian agriculture could run into the multi billions of dollars. Australian farmers are losing out in a major way while ever we don’t have an FTA with Korea and our major competitors like the USA do,” Mr Laurie said.

“We are effectively handing over more and more of our hard-earned market share each year to farmers in the USA and other regions.”

Under the current arrangements, Australia’s $645 million annual beef trade with Korea is subject to a 40 per cent tariff.

“But, under the Korea-US deal, US beef is currently subject to only a 34.6 percent tariff, 5.3 percent less than Australian beef. And this tariff differential is set to widen year by year till 2026, when US beef exports to Korea will be completely tariff free,” Mr Laurie said.

“If this is allowed to go on unchallenged over the long term, we could lose the majority of the trade we currently have with Korea.

Mr Laurie said modelling by the Centre for International Economics indicates that by 2026 – the year US beef imports to Korea become tariff free – Australia will be losing some $182 million AUD per annum in lost sales. In total, Australian beef exporters may lose up to $1.4 billion.

“Around the world, nations are looking to promote trade, particularly with lucrative markets in Asia, to overcome the economic downturn that resulted from the global financial crisis and to put in place a framework of trade agreements in the wake of the languishing WTO Doha negotiations,” Mr. Laurie said.

“We have heard much talk about the opportunity ahead for Australian agriculture in the Asian century – and now is the time to act on this. Korea is Asia’s fourth largest economy and our third largest export market and Australia and Korea already enjoy a $30 billion AUD two way trade.

“We call on the Australian government to act on their commitments to prioritise food exports to the Asian region and find flexible ways to strengthen trade. The Australia-Korea FTA is an excellent place to start,” Mr Laurie said.

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