Aussie and Kiwi farmers are celebrating the removal of 98 per cent of tariffs on exports to buyers across the Asia Pacific.

A multilateral trade deal between 11 countries signed March 2018 will come into effect within 18 months, possibly before Christmas.

This month, I’d like to highlight parts of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) affecting the agriculture industry. 

The deal includes three of Australia’s top 10 trade markets; Japan, Vietnam and New Zealand, with CPTPP markets the destination for 23 per cent and 31 per cent of Australia and New Zealand’s respective agricultural exports. For Australian producers, the highly protected Japanese market was the major focus. Australia saw improvements on the tariff and quota reductions previously achieved under the bilateral Japan-Australia Economic Partnership Agreement (JAEPA) signed in 2015, and the total abolition of tariffs on Australian sheepmeat, wine, cheese, horticulture, cotton, wool and seafood.

Australia’s beef industry was a big winner: tariffs fall to 9 per cent over 15 years, well below the 19.5 per cent and 23.5 per cent achieved under JAEPA, with the 6-50 per cent processed red meat, offal and live cattle tariffs eliminated concurrently.

As Australia’s largest agricultural export worth $7.8 billion in 2016-17, beef will directly compete with New Zealand beef in the premium Japanese market, after Japan’s reduction of New Zealand’s beef tariff to 9 per cent. This new adjustment highlights the fundamental impact FTAs can have.

Beef, sheep meat and goat meat tariffs into Mexico and Peru will be removed, providing potential new markets for Aussie and Kiwi exporters. Dairy exports are another big winner with tariff removal or new quotas on cheeses, milk powder and protein products into Japan. Access into Canada’s highly protected market is a special win and new quotas into Mexico for butter, cheese and milk powder adds another sweetener to the deal.

Biosecurity was a major worry during the negotiations, as Aussie and Kiwi farmers lobbied their governments to ensure our strict, science-based biosecurity rules wouldn’t be affected. 

FTAs have such broad impacts it’s easy to focus on headlines like tariff liberalisation. But their impact is much greater, including benefits from overall increased trade and diversification across more markets, which is harder to calculate.

If you’d like to discuss how FTA’s affect your exports, contact your local Crowe Horwath adviser.