AUSTRALIAN agricultural exports are expected to improve their competitive standing against traditional rival trading nations like the US and EU, while breaking new ground in stifled markets, through the realisation of a new trade deal.
On Saturday, Federal Trade Minister Steven Ciobo revealed negotiations had kicked-off on the Pacific Alliance free trade agreement (FTA) involving a Latin American trading bloc comprising Mexico, Colombia, Chile and Peru.
Australia is one of the first countries in the world to launch FTA negotiations with the Pacific Alliance; a move welcomed by the National Farmers’ Federation (NFF) which said local farmers had previously been virtually “frozen out” of the four markets.
In 2016, the bloc’s GDP was estimated at more than US$1.8 trillion and accounts for 38 per cent of Latin America’s population (221 million) and 57 per cent of its total imports (US$601 billion in 2016).
Australia’s exports to Pacific Alliance members in 2016 was estimated at about $1.8b - accounting for only 0.2pc of imports to the four nations.
Mr Ciobo said many of Australia’s agricultural exports to the four Pacific Alliance countries currently faced high tariffs that “block trade”.
He said tariffs of up to 80pc are imposed on Australian beef, while dairy products attract tariffs of up to 45pc and sugar is hit by tariffs of over 30pc.
“An FTA will ensure Australian businesses have the opportunity to access this market on a level playing field,” he said.
“It will enable Australian businesses to compete with exporters from the US, EU and Canada, who all have preferential access to the Pacific Alliance through their bilateral FTAs with all four countries.”
The NFF said the new trade deal could unlock almost untapped markets for Australian farmers, with President Fiona Simson saying until now, Australian farmers were “all but frozen out” of trading with the four Latin America countries.
Ms Simson said: “It simply has not been economical for Australia to export large quantities of produce to the region.
“Meanwhile, our competitors, including the US, Canada and EU have enjoyed preferential access as a result of free trade agreements forged with the four countries,” she said.
“The region represents immense opportunity for our farm exports.
“Mexico alone has a population of 127 million people and a gross domestic product in excess of $1 trillion.
“The NFF, on behalf of farmers across Australia, share Minister Ciobo’s vision to continue to grow Australian trade.
“Forging stronger ties with the Pacific Alliance bloc is another important step towards such growth.”
Ms Simson said trade was important because three-quarters of what Australian farmers produced was exported.
“We compete in an ultra-price-sensitive global market, against nations that often have significantly lower costs of production and often subsidise their producers to boot,” she said.
“Hopefully, in the not-too-distant future, our Latin American counterparts will be enjoying much more Aussie meat, dairy, sugar, grain, fruit, vegetables and fibre.
“They’ve been missing out.”
The Federal government says it’s seeking a comprehensive, high-quality agreement that includes better market access for goods including agricultural products, aluminium products, mining equipment, pharmaceuticals and paper in particular.
Later this year Mr Ciobo is expected to lead a trade delegation to Mexico to build momentum for signing the FTA.
He recently launched negotiations on deals with Hong Kong and Peru, is working towards the launch of FTA negotiations with the UE and is seeking to conclude an agreement with Indonesia.
He has also been pushing to try and revitalise the Trans-Pacific Partnership (TPP) which hit the wall earlier this year after the US withdrew from the 12-nation deal following Donald Trump’s election as President.
But Mr Ciobo said an FTA with the Pacific Alliance would create new export opportunities for Australian farmers, miners, manufacturers, educators, service providers and investors in some of Latin America’s key economies.
“Australians traditionally look north to Asia to grow their businesses, but there are also opportunities to our east in Latin America that this FTA will help unlock,” he said.
“While Australian trade with the region is growing, it could, and should, be occurring at a much faster rate.
“We have a window of opportunity to strengthen our economic ties with Latin America while the Pacific Alliance is looking to expand its trade relationships beyond their immediate region.
“We hope a deal with the Pacific Alliance can be negotiated quickly, based on our shared negotiating history with three of the four Members of the Pacific Alliance in the TPP.”
Mr Ciobo said the new FTA also opened the door to Mexico for Australian businesses which was a major market - home to more than 127 million people and GDP more than $1 trillion.
“The potential for Australian businesses to meet the growing needs of Mexicans through this FTA is massive,” he said.
“The talks I’ve already had are promising; there is a real demand for Aussie produce, products and services.”
Meat and Livestock Australia said closer economic integration with Pacific Alliance countries had the potential to facilitate new trade opportunities, helping capture the liberalisation benefits offered by Mexico and Peru through the recent TPP negotiations as well as complement Australia’s existing FTA with Chile.