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FTAs crucial to Australia’s agribusiness future

Post a commentBy Andrew Schreiber , 13-Aug-2014

FTAs crucial to Australia’s agribusiness future

Australia must give priority to inking more Free Trade Agreements (FTAs) if it has to secure its agribusiness future, according to a new report by global agribusiness specialist Rabobank.

Priority must be given to policy and regulatory settings that improve market access for Australian exporters, with a heightened focus on the negotiation of FTAs and building relationships with other governments, it said.

Leveraging Australia’s world-class production and supply chain systems is also of utmost importance if the country has to look forward to a profitable agribusiness future, said Matt Costello, Rabobank’s animal proteins analyst

He added that improving market access is critical for the future growth and success of Australian agriculture, given the importance and reliance on exports across all sectors.

However, trade barriers remain.

Since being elected in 2013, the [current] Australian government has made improving market access a priority. And after negotiating the FTA with Japan and Korea, China is now the focus, and with future trade growth expected to come from Asia and the Middle East, urgency should be placed on improving access to these markets too,” Costello said.

Improving market access through FTAs is only one-half of the equation, though. Political and regulatory risks remain in the form of technical trade barriers [TTBs], which are often high for agriculture and can be difficult to resolve.

Technical trade barriers are also less transparent than tariff barriers and can have a greater impact on trade flows.”

According to Costello, the successful negotiation of FTAs with emerging markets should form a “stepping stone” to building and improving relationships in order to prevent and address TTBs.

There is clearly a need for greater collaboration between all facets of agriculture, domestically within industries, cross-sectorally, and with the government,” he said.

A coordinated and strategic approach to formal negotiations as well as breaking down TTBs is critical for the advancement of Australian agriculture.”

Feeding the dragon

Rabobank warned that if Australia cannot negotiate a complete reduction in tariffs like New Zealand has with China, its FTA with the Chinese would not be considered a success.

As China is Australia’s largest agricultural export market, it is imperative an agreement is reached quickly, tariffs are completely phased out and more resources are invested to smooth the developing trade and limit the impact of TTBs,” Costello said.

As it stands, China is close to removing all tariffs on most of New Zealand’s key commodities, particularly ones that directly compete with Australia which will make New Zealand’s exports more competitive relative to ours.

The Australian government needs to act now to protect our position, particularly when it comes to the dairy, beef and sheep industries.”

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