Trade

Australia’s free-trade advantages eroding: ABARES

Grain Central, March 18, 2022

 

AUSTRALIA will need to find new ways to gain a competitive advantage with its agricultural exports as more countries enter free trade agreements (FTA).

Wheat loads at the Fisherman Islands terminal in Brisbane last year bound for Vietnam, where Australia is soon to lose its competitve advantage from an FTA. Photo: GrainCorp

ABARES executive director Jared Greenville said the latest ABARES Insights report, Analysis of Australia’s future agricultural trade advantage, provides a reminder that we need to think about all avenues to improve our trade advantages.

“Australia now has 16 FTA which enable access to markets around the world, bringing huge benefits to Australian agriculture,” Dr Greenville said.

“However, over the last decade, international competitors have started to catch up with their FTA.

“For an industry as reliant on exports as ours, it’s a reminder that we can’t take our advantages for granted.

“Our beef exports to Japan no longer have a tariff advantage over Canada and the US, and in Vietnam, our tariff advantage in wheat over Canada and the EU is set to disappear.”

Australia’s first FTA, with New Zealand, came into force in 1983, and Australia concluded 14 FTAs between 2003 and 2020.

Three quarters of Australia’s agricultural trade in 2020-21 was destined for Australia’s FTA partners.

The Insights report highlighted the early-mover advantages enjoyed by Australian producers.

Australian wheat exports benefited from a tariff advantage in Vietnam for seven years following Vietnam’s accession to the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA).

This was unmatched by other major wheat exporters in the market: Argentina; Canada; the European Union; Kazakhstan; Russia, and the United States.

This was until recently when, in 2019, Vietnam acceded to Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), providing Canadian wheat with the same tariff-free access as Australian wheat.

Wheat from the EU will be tariff free by 2022 under the EU-Vietnam Trade Agreement.

New measures needed

Dr Greenville said Australia needed to look at new ways to enhance access to international markets.

“New or improved biosecurity market access will help, as it will reduce the cost of compliance,” he said.

“So will reductions in unjustified non-tariff measures and a reduction in compliance costs for justified non-tariff measures.

“There are things to be done at home, related to advancing domestic productivity, adapting to a changing climate, and putting in place systems to demonstrate the sustainability credentials of export goods.”

The report highlighted the agreement to export Australian barley to Mexico as an example of the benefits of improved biosecurity arrangements for market access.

The biosecurity arrangements opened a diversification opportunity for Australian exporters to ship barley to a new market.

Following an agreement in 2020 that allowed in-transit phosphine fumigation, Australia’s barley exports to that market rose from zero in 2020 to $25 million in the first few months of 2021.

Dr Greenville said Australia could not get complacent when it came to trade agreements.

“Internationally, Australia and our partners are working towards enhancing the global rules-based trading system and improving global outcomes through lower agricultural subsidies and reductions in non-tariff barriers.

“We sell a good product, but there is plenty of competition out there and we need to work hard to stay ahead of the game.”

Read the full report here

Source: ABARES

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