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Trans-Pacific Partnership welcomed by farming industry

08 October, 2015

The National Farmers' Federation (NFF) welcomes the conclusion of the Trans-Pacific Partnership (TTP) which will improve market access for a range of agricultural commodities, including red meat, dairy, fibre and grains.

Reaching agreement between twelve countries was always going to be difficult and represents a huge milestone. The agreement is a generally positive outcome for Australian farmers, which will reduce trade barriers and create new export opportunities for our high-quality food and fibre.

The historic TPP market access outcomes build on existing trade agreements and includes some of the world's biggest economies (the US, Japan, and Canada). Australian farmers exported around $15 billion of agricultural goods to TPP countries in 2014, representing about one third of total exports of agricultural products, and is set to increase as a result of this agreement.

The TPP will eliminate 98 per cent of tariffs on Australian exports to TPP countries and create longer term benefits for Australian farmers beyond those that can be achieved in a bilateral free trade agreement, specifically in the three countries where we did not have agreements in place, namely: Canada, Mexico and Peru. Importantly, the TPP will also provide for the opportunity over time to include other economies in the Asia-Pacific.

Farmers currently face a range of tariff and non-tariff barriers across the region. Reduced tariffs and greater certainty on rules means more market opportunities and more investment and this means more jobs and growth in regional centres.

More specifically, the agreement greatly improves market access and terms of trade for a number of Australian commodities. In the red meat sector, beef tariffs will be further reduced in Japan and Mexico and will result in the elimination of price safeguards in the United States. Tariffs on sheep meat exports to Mexico will be eliminated in eight years and from day one of the agreement coming into effect in all other TPP countries.

In the grains sector, the agreement will result in the creation of new quota volumes for wheat and barley exports to Japan under the simultaneous buy-sell mechanism which were worth approximately $481 million in 2014. It will also provide for new quota access for roasted malt exports, while tariffs on exports of Australian wheat and barley to Mexico will be eliminated.

For the rice sector, the TPP results in new quota access into Japan with a new 6,000 tonne quota from entry into force, a reduction in tariffs on a number of rice preparation products, and an amendment to the WTO quota of an extra 60,000 tonnes of medium grain rice for processing use.

The TPP will eliminate all remaining tariffs on Australian raw wool and cotton exports to TPP countries from day one of the agreement coming into effect and also deliver improved rules of origin for textiles, which will encourage greater demand for Australian fibre products.

In the dairy sector, the TPP will improve on the Japan Australia bilateral agreement to eliminate tariffs on certain cheese products, and provide tariff reductions and new quota allocations for remaining cheese products.

In the horticulture sector the TPP will result in the elimination of all Canada's horticulture tariffs and most of Mexico's tariffs upon entry into force and most of Peru's horticulture tariffs (currently up to 17%) after 15 years.

While the TPP should be supported, it is of course regrettable that more leadership was not demonstrated by the likes of the United States in sectors such as sugar where the agreement will result in a modest increase in exports of 65,000 tonnes into the US market plus an opportunity to supply a percentage of the projected growth over the next decade

While not reaching the high ambition sought by some sectors, there should be no doubt that Australia needs to be a party to the TPP deal. The nature of agreement means that exclusion from a completed TPP agreement would have delivered significant negative outcomes for Australian agriculture.

Regardless, reaching consensus with twelve other nations is significant and game changing for trade. We would like to thank Minister for Trade and Investment Andrew Robb and officials for an unwavering commitment to finalise a comprehensive and liberalising agreement for the Australian community.

On the whole, there is no doubt this agreement will improve trading conditions for Australian farmers, and must be seen as a baseline template for future plurilateral agreements.

The TPP is a multi-country Trade Agreement between Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Japan, the United States, Vietnam, Mexico and Canada.

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