KAFTA and JAETA Prospects for Queensland
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1 KAFTA and JAETA Prospects for Queensland
2 Korea-Australia Trade Relations Korea 3 rd largest export market ($5B) Agriculture exports: $1B Beef ($490M) Sugar ($464M) Cereals ($32M) FTAs: USA, Singapore, Chile, ASEAN, EFTA, India, Peru and EU
3 The Agreement KAFTA was signed on 8 April 2014 in Seoul by Minister Robb and Korean Trade Minister Yoon. Approval by Korea s National Assembly pending If the agreement enters into force before the end of 2014, there would be an initial tariff cut, followed by a second tariff cut on 1 January 2015 Agriculture exports expected to increase by 73% as a result of KAFTA Products too sensitive: rice, unhulled barley, milk powder, abalone, ginger, apple, pears, watermelon, walnuts, onions, capsicums, garlic and frozen pork belly
4 Key Tariff changes Product Base Tariff Rate % Tariff Removal Other Beef 40 Over 15 years 37.3% on entry into force: safeguard Bovine offals 18 Over 15 years No safeguards Processed beef products 72 Over 15 years No safeguards Raw sugar 3 On entry into force Sheep 22.5 Over 10 years 22.5% on entry into force Wheat 1.8 On entry into force Malt, malting barley 269, 513 Over 15 years; 10,000 t immediate duty-free quota; safeguard Cheese and dairy products 36 Over 20 years; 4,630 t immediate duty-free quota cheese Southern Bluefin tuna (frozen), rock lobsters 10, 20 Over 3 years Wine 15 On entry into force
5 Key Tariff changes - horticulture Product Base Tariff Rate % Tariff Removal Other Almonds, cherries, dried grapes 8, 21, 24 On entry into force Macadamia nuts, carrots 30 Over 5 years Asparagus 24 Over 3 years Mangoes, peaches, plums and peanuts Bananas, pineapples, avocados 30, 45, 45, 63.9 Over 10 yeas 30 Over 15 years Tomatoes, apricots 45 Over 7 years Lemons 30 Over 18 years Potatoes (for chipping) 304 Seasonal tariff elimination Dec-April Table grapes, oranges, mandarins, kiwi 45, 50, 144, 45 Seasonal tariff elimination Oranges 20 t immediate duty-free quota
6 Non-Tariff Considerations KAFTA does not modify market access legislation: Sanitary and phytosanitary regulation still need to be followed Quarantine protocols still restrict open access to markets To claim preferential tariff treatment the rules of origin need to be followed: Certificate of origin completed by the exporter/issued by an authorised body A claim for preferential tariff treatment will be able to be made postimportation KAFTA also includes provisions to simplify borders procedures: Publication of customs and trade related legislation Risk management Advance electronic submission and processing of documentation Simplified customs procedures Harmonising customs documentation and data requirements
7 Japan-Australia Trade Relations Japan is Australia s secondlargest agricultural market, worth $4B in Queensland agricultural $1.65B (2012/13) Beef $1.16B Sugar $194M Animal feed $166.9M Cereals $62M FTAs: Peru, India, Thailand, Singapore, Philippines, Malaysia, Mexico, Chile, Indonesia, Vietnam, ASEAN, Switzerland, Brunei and Korea
8 THE AGREEMENT Japan-Australia Economic Partnership Agreement (JAEPA) was signed on 8 July 2014 in Canberra by Prime Minister Abbott and Prime Minister Abe. JAEPA will deliver significant benefits to Australian agricultural producers, resource exporters, service providers and consumers. Products too sensitive: rice, butter, fresh milk, milk powder.
9 Key Tariff changes PRODUCT BASE RATE (%) TARIFF OUTCOME FROM JAEPA Beef (fresh or chilled) 38.5 Immediate fall to 32.5% on entry into force. Reduced to 23.5% incrementally over 15 years Beef (frozen) 38.5 Immediate fall to 30.5% on entry into force. Reduced to 19.5% incrementally over 18 years Sugar highly refined Sugar high polarity raw sugar 105 Reduced to 67% Immediate tariff reduction Bottle wine 15 Over 7 years Wheat for feed and barley for feed Up to 50/kg ($0.53/kg) Tuna, fresh or chilled swordfish, fresh marlin and Atlantic salmon Duty free and quota free access Streamed export arrangements 0-15 Eliminated over 10 years Southern Bluefin tunas 3.5 Tariff elimination by 11 th year
10 Key Tariff changes: horticulture/food PRODUCT Tomatoes, Zucchini, Capsicum, Snow Peas, Cucumbers and Avocados (fresh or chilled) BASE RATE (%) TARIFF OUTCOME FROM JAEPA 3 Immediate tariff elimination on entry into force Melons 6 Tariff elimination over 5 years Watermelons 6 Immediate tariff elimination on entry into force Mandarins 17 Tariff elimination over 10 years Macadamia nuts, asparagus 3, 5 Immediate tariff elimination on entry into force Vegetable juice eliminated over 7 years Grape and mixed juice 19, 30 eliminated over 5 years Apple/grapefruit juice 19,34 eliminated over 7, 10 years Canned tomatoes eliminated over 5 years Prepared foods (soups and broths, jams and peanut butter) Pet foods Chocolate exports to enter Japan canned/preserved fruits eliminated over 7 years eliminated within 10 years. Eliminated from entry into force up to 10 years. duty-free or at a reduced tariff rate. Crips bread eliminated Tariffs on biscuits, pastry, cakes and breakfast cereals over 15 years. Reduced
11 Market Access Matters JAEPA does not modify market access legislation for fresh produce: Sanitary and phytosanitary regulation still needs to be followed. No access for many horticulture products Quarantine protocols still restricts open access to markets Pre-clearance inspector: table grapes Maximum Residue Limits (MRL): Mangoes: fludioxonil
12 Prospects for Queensland - Korea Immediate: Beef ($490M) Sugar ($464.8M) Sheep meat ($3.3M) Processed food Emerging - short-medium term: Seafood ($170K) Asparagus* Dairy ($106K) Mangoes* Macadamia nuts* Lemons* Table grapes* Oranges* Potatoes (for chipping)* Opportunity long term: Carrots Peaches, plums Bananas, pineapples, Avocados Tomatoes, apricots, Mandarins, kiwi * Existing market access protocols
13 Prospects for Queensland - Japan Immediate: Beef: $1.6B Sugar: $194M Macadamia nuts Processed foods Emerging short term: Dairy (cheese): $4.5M Asparagus* Mandarins* Mangoes* Table grapes* Potential long term: Tomatoes, capsicum Zucchinis, Snow peas, cucumbers Avocados Melons, watermelons * Existing market access protocols
14 TIQ Priorities Korea: Beef Horticulture products mangoes, table grapes Seafood Premium processed foods Agri-investment: sugar, beef, grains Japan: Beef Horticulture products citrus, table grapes, fresh vegetables Premium gourmet foods Agri-investment: beef, grains
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