China free trade agreement held up as a win for Aussie agriculture

A free-trade agreement has been concluded between China and Australia in a move that looks set to boost beef, dairy and wine exports.

Australian Prime Minister Tony Abbott announced the completion of negotiations for the bilateral free trade agreement in a statement on Monday morning.

In a later release issued this afternoon, the Prime Minister said more than 85% of Australian goods exports will be tariff-free upon the deal taking force, with that figure rising to 93% in four years.

Tariffs will be abolished for Australia’s $13bn dairy industry under the deal, while Australia’s beef and sheep farmers will also see tariffs ranging from 12-25% eliminated. Tariffs on Australian wine, currently at 14-30%, will go within four years along with levies on a wide range of seafood.

China is Australia’s largest trading partner, with $150bn in goods and services flowing between the two countries last year, according to Department of Foreign Affairs and Trade (DFAT) figures.

According to Grant Thornton Australia’s national head of food and beverage, Tony Pititto, the removal or reduction of tariffs is an important step for Australian agricultural producers.

“Whilst the [free trade agreement] will help Australian producers decrease their reliance on the Australian market and its strong supermarket position, developing the right relationships with Chinese customers will be crucial to Australian companies being able to take advantage of greater access to Chinese markets,” Pititto said.

Speaking this morning, Agriculture Minister Barnaby Joyce said he was confident the deal would be “well received”.

Tariffs remaining on minerals commodities and coal will also be phased out under the deal, while measures to encourage more foreign investment between the two countries are also included.

Pititto says this too could impact the agricultural sector, with Grant Thornton expecting interest from Asian investors in the sector to continue to grow.

“Our global research indicates approximately 1/3 of all Australian food and beverage companies surveyed will look at acquisitions in the next 12 months, and a further 1/3 will look at selling their organisations or businesses over the same period,” Pititto said.

Chinese and English language versions of the agreement text will be prepared for signature in 2015.

Source : CBA My Wealth   Melanie Timbrell    17th November 2014