The off-again, on-again TPP deal
The on-again, off-again Trans-Pacific Partnership looks like it is finally on, minus one of the key original parties, the United States. But will it mean anything for Australian cattle producers?
One may argue that the withdrawal of the US is actually a gain for the Australian beef industry.
When the US was in, Australia would have received tariff reductions in a number of countries but so would the US. In the case of Japan, which is the biggest market for Australian beef of the countries in the agreement, this would have put Australia and the US back on an even keel, negating the current advantage Australia has under the Japan Australia Economic Partnership Agreement.
Instead, without the US being part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (new 11 member TPP), Australia gets to enjoy not only the advantage under the JAEPA but also the additional tariff reductions under the CPATPP.
Under JAEPA, the tariff applied to Australian chilled beef arriving in Japan was scheduled to drop to 23.5 per cent by 2028. Under the proposed CPATPP, the tariff rate will fall to nine per cent after 16 years from the date of ratification.
In the meantime, the US without any agreement, will still be faced with the base tariff of 38.5 per cent.
In a market that has consistently taken, on-average, $1.7 billion worth of Australia’s beef, this is a significant advantage. Furthermore, it balances out the fact that the US currently enjoys a three-year tariff reduction schedule advantage over Australia into Korea. As far as the other countries involved in the CPATPP, Australia’s beef trade is smaller and not expected to see much increase, particularly given that most of the countries already have minimal tariff barriers. Although the five per cent tariff on male live cattle exports to Vietnam is scheduled to be removed on the date of commencement, which will support Australia’s live cattle trade with Vietnam. The value of Australian beef exports to the other nine countries over the last five year has averaged $389 million (Canada, Malaysia and Singapore account for 73 per cent of this) or about 5.5 per cent of the total value of Australian beef exports. But there are broader benefits of the CPATPP beyond tariff reductions in the beef industry. While Australia currently has the ASEAN, Australia New Zealand FTA, which includes many of the countries in the CPATPP, this agreement brings in major trading player Japan and also two, of the three, North American Free Trade Agreement countries in Canada and Mexico.