ChAFTA tariff cuts opened the valve for Australian food and fibre exporters but the trade pipes remain clogged with a mass of non-tariff barriers that need to be scoured out for the full benefits to flow.
Australian farmers and food processors lined up to support the China Australia Free Trade Agreement (ChAFTA).
Both sectors recognise the deal’s benefits. For farmers, higher farmgate returns, and for manufacturers the growth opportunities for value-added food.
Since December 2015 when the ChAFTA came into effect there has undoubtedly been a boost in trade, enabling more of Australia’s high quality food to meet growing demand from Chinese consumers.
Seafood and horticulture have been big winners. Demand is also growing across a range of food categories from baby formula and vitamins to snacks and breakfast cereals.
But non-tariff barriers worsened by slow bureaucratic processes are imposing costs and delays, and leave farmers and the food sector feeling ChAFTA is not delivering to its potential.
Preferential access through lower tariffs has opened the valve but more than 12 months on the trade pipes remain clogged with a mass of non-tariff barriers that need to be scoured out for the full benefits of ChAFTA to both Australia and China to flow.
Hardly a day goes by without companies experiencing delays, rejections, uncertainty and extra costs due to regulatory barriers, inconsistent application of import rules between different ports and lengthy, uncertain processes to register products and export facilities.
It’s affecting farmers and value-added food exporters alike.
And all the while competitors from lower cost countries are actively chasing market share in China, eroding any short term advantage Australia has gained from tariff cuts.
It was always recognised that for the deal to be its best-self, non-tariff barriers would need to be addressed.
The final agreement included mechanisms to address non-tariff barriers on a case by case basis and a commitment by the ChAFTA Trade in Goods Committee to meet within 12 months of the deal being signed to discuss addressing non-tariff measures.
That deadline passed in December. The committee, comprising senior officials from both sides, will meet for the first time only next week.
Despite the timetable not being met, we remain hopeful.
To make up for lost time next week’s meeting must provide leadership and set an agenda for actually addressing non-tariff measures, not just a commitment to keep talking about them.
That means a commitment to harmonisation around accepted international standards; alignment of scientific and analytical methods to underpin those standards and agreement to the development of a time-bound, evidence based process for addressing specific NTMs.
There is no doubt this is now the biggest trade issue for Australian agricultural and food exporters to China.
For example, the lack of recognition of Australia’s rigorous scientific based product testing leads to delays in registering products and additional product testing costs; the lengthy and changing lists of ingredients, additives and flavours that require special approvals also leads to delays and costs, including wastage of products when the requirements change; and limits on the number of facilities that can be approved for export, or lengthy approval processes, reduces the number of companies that are able to export.
While some of these measures may be justifiable on policy grounds, most unnecessarily restrict trade or increase costs on business with no additional consumer protection or biosecurity benefit, effectively acting as unjustified non-tariff barriers.
These issues can be overcome, and they must be in order to achieve the win-win of meeting the growing demand from Chinese consumers for Australia’s high quality and safe food exports, and helping to drive investment, growth and jobs in Australia’s food and fibre sector.
With food safety and quality front of mind for a growing number of Chinese consumers, and the rapid uptake of e-commerce in China, the recent growth in demand for Australian dairy, meat and vitamin exports is spreading to other products including beverages and breakfast cereals.
Taking their lead from the preferential access agreement embodied in ChAFTA negotiators must go the logical next step and make the China – Australia route the pioneer for fast-tracked customs procedures and alignment of import-export standards.
Such collaboration offers fulfilment for both Chinese consumers and Australian food exporters and is truly in the spirit of ChAFTA.
Gary Dawson, CEO Australian Food and Grocery Council
Tony Mahar, CEO National Farmers' Federation
This opinion article first appeared in The Australian on Monday, 23 January, 2017. To view, please click here