ASEAN trade deal to give lift to cheap food imports: Truss

Posted by Daniel Palmer on 6th January 2010

The free trade agreement with ASEAN countries, which came into effect this week, offers little benefit to Australian producers while removing all tariffs on food imported into Australia, according to the leader of The Nationals and Shadow Trade Minister, Warren Truss.”This free trade agreement is an alarming example of what Labor is prepared to concede to get a seat at a treaty signing ceremony,” Mr Truss contended. “AANZFTA may well be the first trade agreement Australia has signed which will have a net negative economic impact on Australia.”

From January 1, tariffs on 96.4 percent of Australian imports from ASEAN countries are reduced to zero, with cars and textiles, clothing and footwear to escape the zero rate.

But none of the other AANZFTA countries are offering similar access to Australian goods, Mr Truss claimed. Under the deal, three ASEAN countries will have only 5 per cent of their tariffs at zero now and one will have none at zero before 2013. Even New Zealand will still have 10 per cent of its tariffs above zero in 2013.

All food and agricultural products entering Australia from ASEAN countries will be tariff-free but Australia’s exports to ASEAN will continue to face steep tariff barriers for decades, the Nationals noted.

Federal Trade Minister Simon Crean said earlier this week that the Government was delighted with the agreement, Australia’s largest free trade deal, and is adamant that food exporters would be among the lead beneficiaries.

“The commencement of this agreement is a major milestone and opens up significant opportunities for Australian businesses in one of the fastest growing regions in the world,” Mr Crean said. “By 2020, the deal will eliminate tariffs on 96 per cent of our current exports to ASEAN nations.”

Some of the benefits touted included:

* The immediate elimination of a 10 per cent tariff on $9.6 million of Australian processed cheese exports to Malaysia
* The immediate elimination of a 5 per cent tariff on $7.2 million of exports of fresh grapes to Malaysia
* The immediate elimination of a 3 per cent tariff on $22 million of wheat exports to the Philippines
* The immediate elimination of a 5 per cent tariff on $3 million of sheepmeat exports to the Philippines

However, Mr Truss believes the deal will further boost the number of cheap food imports into the country, placing greater pressure on the food processing sector.

He said the deal would see Australia’s tariffs cut immediately in most cases, while doors for Australian exporters may not be opened until 2020 and beyond. Citrus and sugar were cited as two examples of sectors where Australian producers would reap little or no benefit in the coming decade.