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The opportunities a ‘gold standard’ trade agreement could provide are being closely watched, as insiders warn not to put too many eggs in the China basket.
The Australia-United Kingdom Free Trade Agreement commenced on Wednesday, with beef and sheep meat set to be among the big winners in coming years.
Australian beef currently attracts UK duties as high as 12 per cent, plus 254GBP/100kg.
This will be significantly improved with immediate access to a duty-free quota of 35,000 tonnes, rising in equal instalments to 110,000t in year 10.
For sheep meat exporters - who faced duties as high as 12pc, plus 260GBP/100kg – the FTA means immediate access to a duty-free quota of 25,000t, rising in equal instalments to 75,000t in year 10.
The commencement of the A-UK FTA comes amid a growing conversation around market access, as industry and government look to capitalise on opportunities in the post-pandemic era.
Speaking at the Global Food Forum in Melbourne last week, Cattle Australia chair David Foote said as an export-dependent country, ‘the access to market access is critical for us’.
And the more markets we have, the greater the competitive platform is.
“Market access is the greatest opportunity that we’re always going to have,” Mr Foote said.
Proof of that is no more evident than when we lose access, as was seen with China placing trade suspensions on some Australian beef processing plants.
The signs are positive for those who remain locked out, with Mr Foote saying there had been a recent indication of China softening its stance.
However, tension has arisen over a joint cybersecurity advisory issued by the Five Eyes cyber agencies – which includes Australia – that blames China for recent cyber attacks targeting ‘critical infrastructure’ in the United States.
“I’m not sure the drawer mightn’t close before it gets opened, so we’re a little bit on tenterhooks there,” Mr Foote said.
“But that’s the risk of the China market, and the excitement of the risk of the China market.
“What it has taught us - nobody is going to put all their eggs back in one basket, despite the value that China brought to the Australian beef industry.”
Looking beyond China is certainly the play for Australian Agricultural Company, with chief executive officer and managing director David Harris saying they ‘look all around the world’ for market opportunities and it changes depending on where certain economies are at the time.
“It’s been really interesting to see how different economies have come out of Covid at different paces,” Mr Harris said.
“This time last year, we certainly had a very North American focus and that’s worked out really well for us.
“We’re seeing places like Europe start to come out of Covid a lot more now than they have in the past, and then obviously China, I think, will be further behind that again.”
In the short to medium term, the high-paying European market appears a good opportunity for AACo, Mr Harris said.
“We’re into the UK as we speak, so we certainly have beef in London and places like that, and we’ll continue on that.
“It will all work through in line with the broader strategy of the business, but I think any FTA - any further access we get as a country, and particularly beef, but as all commodity producers - has got to be a positive thing for a nation such as ours that is a majority exporter.”
Whether our trade relationship with China returns to what it once was remains to be seen, but federal Agriculture Minister Murray Watt echoed the sentiment that there were lessons learnt from recent dealings.
“Even with the trade interruptions we’ve had with China, it does still remain our biggest trading partner by a long stretch and that includes in a range of agricultural commodities,” Mr Watt said.
“Obviously, there has been a very big impact on a relatively small number of commodities, and I think any producer would tell you that they’d want to have China as an option just given the size of the population, the wealth in those communities and the real interest in our premium products.
“One of the good things that has come from this is that our producers, and I think all Australians, have leant that we do need to have much more diversified markets.”
The minister agreed we probably did have 'a few too many eggs in the China basket' across a range of commodities.
“That’s understandable because for a range of products they were prepared to pay very good premiums, but I guess the issues with China have forced the Australian government and producers to look elsewhere as well," Mr Watt said.
“That’s why some of those free trade agreements that we’ve been signing with other countries are so important.”
