31 July 2014
A Federal parliamentary committee is continuing to look at the proposed Korea-Australia Free Trade Agreement, which is promising a 73 per cent increase in agricultural exports.
The committee held public hearings in Sydney and Brisbane this week to examine the pros and cons of the deal, and heard from a number of industry groups.
Korea is Australia’s third-largest export market. It’s also Australia’s fifth-largest market for agricultural exports.
The committee chair, MP Wyatt Roy, says there are substantial gains to be had if the KAFTA is ratified sooner rather than later.
“If we can ratify this treaty before the end of the calendar year, the tariff cuts come into effect much sooner,” said Mr Roy.
“For the beef industry, if we can ratify the treaty this year instead of next year, that’s an extra $408 million going to the beef industry.”
When, and if, the agreement is ratified, it will eliminate tariffs on Australian agricultural exports including beef, wheat, dairy, wine, horticulture, seafood, and sugar.
A free trade agreement with Korea will see the three per cent raw sugar duty scrapped.
Dominic Nolan, CEO of the Australian Sugar Milling Council, says Australian raw sugar exports are worth two billion dollars a year and the FTA is very important.
“One of our main competitors, the Thai sugar industry, is also moving to a zero tariff position.
“If we were left with a tariff in place, it would put us at such a disadvantage that it could have threatened the entire viability of that market for us.”
The nut industry will be a big winner from a free trade agreement with Korea.
Australia’s largest horticultural export, nut exports were worth $600 million last financial year.
Chris Joyce from the Australian Nut Industry Council says that figure is expected to become reach $1 billion in a few years.
“With almonds, the Americans already have a free tariff into Korea and we haven’t sold any almonds into Korea since that occurred,” Mr Joyce said.
Australian almonds currently face an eight percent tariff, while macadamias have a 30 per cent duty.
“The Australian macadamia industry is investing significant marketing dollars into Korea to explain to Koreans what a macadamia is.
“We believe, with the removal of the tariff over the next five years, the Korean market may reach 2,000 tonnes which is about $30 million.”
Addressing the public hearings this week, the Australian Manufacturing Workers Union reiterated its opposition to the treaty that it calls ‘a disaster for manufacturing’ and a ‘cows for cars deal’.
MP Wyatt Roy admits that there are always ‘trade-offs’ in trade negotiations.
But he says Australian consumers will benefit.
“Korea has something to gain in terms of its exports into Australia.
“While that’s a win for Korean exporters, it’s also a win for Australian consumers,” said Mr Roy.
“We’ll have cheaper cars, cheaper electronic products.”
Not everyone’s a winner though.
Rice has been left out of the agreement, and while the nut industry will see significant tariff reductions for macadamias and almonds under KAFTA, the Koreans don’t don’t want Australian walnuts or chestnuts.
“The tariffs won’t be removed,” said Chris Joyce.
“You don’t get everything you want in trade agreements, but we really should focus on the positives because the benefits to the macadamia and almond industries will be substantial.”
Courtesy ABC Rural