Tariff-ic New Year for farmers

The Hon David Littleproud MP
Minister for Agriculture and Northern Australia

• New tariff cuts to expand Australian farming export opportunities

• Regional Comprehensive Economic Partnership comes into effect tomorrow, providing better access to regional value chains

It’s a happy new year for Australia’s record-breaking farmers as improved market access and tariff cuts come into play on a range of commodities.

Minister for Agriculture and Northern Australia David Littleproud said 2022 will be a year of opportunities for our agricultural, fisheries and forestry exporters.

“Ongoing tariff reductions under free trade agreements negotiated by the Australian Government build on the huge benefits they have already delivered for our farmers,” Minister Littleproud said.

“The Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement with 15 signatories including Australia, enters into force from 1 January 2022.

“Our exporters will be able to tap into regional value chains through rules that will support the use of Aussie inputs into goods produced and exported across the RCEP region.

“A series of tariff reductions and other market access improvements also roll out tomorrow under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and other free trade agreements.

“For example, tariffs on barley to Mexico will be eliminated completely, further enhancing our competitiveness.

“2021 saw Australia’s first shipment of barley to Mexico under the CPTPP valued at more than $69 million – a fantastic achievement”

“From tomorrow, we’ll see expanded Tariff Rate Quotas on cheese to Canada and Mexico, further supporting opportunities in these markets.

“Tariff Rate Quotas under the Indonesia-Australia Comprehensive Economic Partnership Agreement will increase for live cattle, citrus, and feed grain.

“And we’ll see the ninth round of tariff cuts under the Korea Australia Free Trade Agreement, with tariffs on beef falling to 16 per cent and lamb 2.25 per cent, and quotas for cheese and malt barley all increasing.

“Free trade agreements will continue to stimulate investment and demand for premium produce as we expand our export trade and recover from the global COVID-19 pandemic.

“They provide a further boost for our farmers who are propelling the agriculture sector towards anticipated new production records in 2021-22.

“Farmgate value is on track to top an incredible $78 billion in 2021-22, a record for the industry

“The value of our farming exports is also predicted to hit an historic high of $61 billion.

“We’re supporting farmers all the way as part of our Ag 2030 plan to help the agriculture sector work towards its $100 billion goal by 2030.”

Fast facts

  • The CPTPP is a free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. It entered into force for the initial ratifying countries on 30 December 2018.
    • On full implementation the CPTPP will eliminate more than 98 per cent of tariffs in a trade zone worth $14 trillion (2020) when it was signed, covering 500 million people and providing preferential access for over $5.5 billion of Australian agricultural exports.
    • From 1 January 2022 a range of additional tariff improvements will commence, including further opportunities for expanding trade in barley, beef, dairy and horticulture.
    • Mexico’s tariff for barley will be eliminated in full (down from 115 per cent prior to CPTPP coming into force).
    • Mexico’s tariffs for certain beef products will drop to 12.5 per cent, down from 25 per cent prior to the CPTPP.
    • Mexico and Canada’s Tariff Rate Quotas on cheese will increase from 4,925T to 5,150T and 2,417T to 3,021T per year respectively. Cheese exports to Canada have increased from a low base to around $9.6m in 2021.
  • The IA-CEPA entered into force on 5 July 2020. More than 99 per cent of Australian goods exported to Indonesia now enter duty free or under improved and preferential arrangements.
    • From 1 January 2022, there will be further expanded TRQs for live cattle, feed grain and citrus.
    • Live cattle from 598,000 head – to 621,920 head (saving the industry approximately $9m).
    • Feed grain from 525,250T – to 551,250T
    • Oranges from 10,500T – to 11,025T
    • Lemons and limes from 5,125T – to 5,253T
  • The Peru-Australia Free Trade Agreement (PAFTA) came into force on 11 February 2020.
    • PAFTA delivered immediate tariff eliminations to key agricultural commodities such as wheat, seafood, sheep meat, most wines, kangaroo meat, almonds, most horticultural goods and most pork goods.
    • From 1 January 2022 rice, dairy, sugar, and sorghum Tariff Rate Quotas will increase into Peru.
  • The Korea Australia Free Trade Agreement (KAFTA) entered into force on 12 December 2014.
    • Trade with South Korea has remained strong over the first three quarters of 2021 compared to the same period in 2020. Beef and veal exports have increased by 12 percent and lamb has increased by 19 per cent.
    • On 1 January 2021 another round of KAFTA tariff cuts come into effect, delivering benefits across a range of agricultural commodities:
    • Beef tariffs will fall from 18.6 to 16 per cent.
    • Cheese Tariff Rate Quotas will increase from 5,694T to 5,865T
    • Lamb tariffs will fall from 4.5 to 2.25 per cent.
  • RCEP comes into force on the 1 January 2022 and is the world’s largest FTA, with the 15 signatories making up 29 per cent of the world’s GDP and 30 per cent of the world’s population
    • RCEP brings nine of Australia’s top 15 agricultural, fisheries, and forestry trading partners into a single economic framework.
    • RCEP’s regional nature will increase opportunities for Australian business to build and access regional value chains, by providing a single set of rules and procedures for accessing preferential tariffs across the region
    • At the same time, traders will continue to have access to Australia’s high standard existing FTAs, including where they are more favourable.

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