New Year tariff for farmers

• Further tariff reductions to expand Australian agricultural export opportunities

• The Comprehensive Regional Economic Partnership enters into force tomorrow, providing better access to regional value chains

It’s a happy new year for Australian farmers who are breaking all records as better market access and tariff cuts come into play on a range of commodities.

Agriculture and North Australia Minister David Littleproud has said 2022 will be a year of opportunity for our agriculture, fisheries and forestry exporters.

“The tariff cuts underway under the Australian government’s negotiated free trade agreements build on the enormous benefits they have already provided to our farmers,” said Minister Littleproud.

“The Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement with 15 signatories including Australia, comes into force on January 1, 2022.

“Our exporters will be able to tap into regional value chains through rules that will support the use of Australian inputs in goods produced and exported to the RCEP region.

“A series of tariff reductions and other market access improvements will also be rolled out tomorrow under the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) and other free trade agreements.

“For example, tariffs on barley to Mexico will be completely eliminated, further improving our competitiveness.

“2021 saw the first shipment of barley from Australia to Mexico under the CPTPP valued at over $ 69 million – a fantastic achievement”

“Starting tomorrow, we will see expanded tariff rate quotas on cheese in Canada and Mexico, which will further support opportunities in these markets.

“Tariff rate quotas under the Indonesia-Australia Comprehensive Economic Partnership Agreement will increase for live cattle, citrus fruits and feed grains.

“And we will see the ninth round of tariff cuts under the Korea-Australia Free Trade Agreement, with tariffs on beef falling to 16% and lamb to 2.25%, and quotas for cheese and malted barley will all increase.

“Free trade agreements will continue to drive investment and demand for higher quality products as we expand our export trade and recover from the global COVID-19 pandemic.

“They give new impetus to our farmers who propel the agricultural sector to new production records expected in 2021-2022.

“Farm-gate value is on track to surpass an incredible $ 78 billion in 2021-2022, an industry record

“The value of our agricultural exports is also expected to reach an all-time high of $ 61 billion.

“We are supporting farmers throughout the process as part of our Ag 2030 plan to help the agricultural sector reach its goal of $ 100 billion by 2030.”

Fast facts

  • The CPTPP is a free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. It entered into force for the first countries to ratify the convention on December 30, 2018.
    • When fully implemented, the CPTPP will eliminate more than 98% of tariffs in a trade zone worth $ 14 trillion (2020) when signed, covering 500 million people and offering preferential access to more than $ 5.5 billion in Australian agricultural exports.
    • From January 1, 2022, a series of additional tariff improvements will begin, including new opportunities to expand trade in barley, beef, dairy and horticulture.
    • Mexico’s barley tariff will be completely eliminated (up from 115 percent before the CPTPP came into effect).
    • Mexican tariffs for some beef products will drop to 12.5 percent, from 25 percent before the CPTPP.
    • Mexico’s and Canada’s tariff rate quotas on cheese will be reduced from 4,925 T to 5,150 T and from 2,417 T to 3,021 T per year respectively. Cheese exports to Canada have grown from a low base to about $ 9.6 million in 2021.
  • IA-CEPA came into effect on July 5, 2020. More than 99 percent of Australian goods exported to Indonesia now enter duty-free or under enhanced and preferential arrangements.
    • From January 1, 2022, tariff rate quotas will be further extended for live cattle, feed grains and citrus fruits.
    • Live cattle from 598,000 head to 621,920 head (saving industry approximately $ 9 million).
    • Feed grain from 525 250T to 551 250T
    • Oranges from 10,500T – to 11,025T
    • Lemons and limes from 5.125T – to 5.253T
  • The Peru-Australia Free Trade Agreement (PAFTA) entered into force on February 11, 2020.
    • PAFTA carried out immediate tariff eliminations on key agricultural products such as wheat, seafood, mutton, most wines, kangaroo meat, almonds, most horticultural products and most pork products.
    • From January 1, 2022, tariff rate quotas for rice, dairy products, sugar and sorghum will increase in Peru.
  • The Korea-Australia Free Trade Agreement (KAFTA) entered into force on December 12, 2014.
    • Trade with South Korea remained strong in the first three quarters of 2021 compared to the same period in 2020. Exports of beef and veal increased by 12% and lamb by 19%.
    • On January 1, 2021, another round of KAFTA tariff reductions will take effect, offering benefits to a range of agricultural products:
    • Tariffs on beef will drop from 18.6 to 16 percent.
    • Tariff rate quotas for cheese will go from 5,694T to 5,865T
    • Tariffs on lamb will drop from 4.5 to 2.25 percent.
  • The RCEP comes into effect on January 1, 2022 and is the largest FTA in the world, with the 15 signatories representing 29% of global GDP and 30% of the world’s population
    • RCEP brings together nine of Australia’s top 15 trading partners in agriculture, fisheries and forestry under a single economic framework.
    • The regional nature of RCEP will increase the opportunities for Australian businesses to create and access regional value chains, providing a unique set of rules and procedures for accessing preferential tariffs across the region.
    • At the same time, traders will continue to have access to Australia’s existing high-quality FTAs, including where they are most favorable.
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