Extreme urgency has been stamped on Australia to iron out a Free Trade Agreement (FTA) with Korea before the years ends as the country's beef industry could stand to lose some $13 million in 2013 as the tariff disparity with competing US beef widens in international markets.
An earlier study made by the Centre for International Economics (CIE) revealed Australia will be exposed to significant financial and market share disadvantage if the Australia-Korea FTA (AKFTA) continues to get delayed.
It said that with the tariff disparity between the US beef and Australian beef, the latter could lose $182 million by 2026, and in the absence of the AKFTA, could further decelerate by 26 per cent.
"From 1 January 2013, imported beef from the US will have a 5.3 per cent tariff advantage over Australia, as a result of the Korean-US FTA. Under the schedule next year, the US will pay a preferential tariff of 34.67 per cent, compared to 40 per cent for Australian beef," Stephen Kelly, Australian Meat Industry Council (AMIC), said in a statement.
And on the 1st of January of every year, this tariff differential will widen by a further 2.66 per cent, as US beef enters Korea tariff-free effective 2026.
"Eventually, the cumulative losses would approach $1.4 billion over the 15-year term," according to www.beefcentral.com citing relevant CIE data.
Australia and Korea have yet to enter into an FTA because of a deadlock on an Investor State Dispute Settlement (ISDS) structure in the agreement. The Australian federal government wants the phrase eliminated while the Korean government wants its inclusion.
"The Australian Government has just released its 'Australia in the Asian Century' White Paper, where it suggests that FTAs give concrete benefits and help agriculture and food exporters to compete on equal terms. The Australian beef industry is now urging the Government to act decisively and work on implementing the vision outlined in its own White Paper, by completing the Australia-Korea FTA," Mr Kelly said.
"Delays in the AKFTA negotiations will have a disastrous effect on beef sales into Australia's third largest beef export market," Mr Kelly said. "Waiting for the Australian and Korean Governments to resolve the ISDS issue is not a cost-free exercise for the beef sector.