Cheap import boost in ASEAN trade deal
5th January, 2010
The Australia and New Zealand free trade agreement with ASEAN countries, which came into effect this week, removes all tariffs on food imported into Australia but offers little or no benefit to our producers.Trade Minister Simon Crean has hit the airwaves to sell the agreement, but the reality is this ASEAN-Australia-New Zealand Free Trade Agreement is a bad deal for Australia, the Leader of The Nationals and Shadow Trade Minister, Warren Truss, said today.
“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 said.
“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. Labor favourites, cars and textiles, clothing and footwear escape the zero rate.
But none of the other AANZFTA countries are offering similar access to Australian goods. Under the deal, three ASEAN countries will have only 5 percent of their tariffs at zero now and one will have none at zero before 2013. Even New Zealand will still have 10 percent 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. Many ASEAN tariffs will never be removed.
Tariff reductions under AANZFTA are in some instances less than Thailand had already implemented in the free trade agreement between Australia and Thailand negotiated by former Coalition trade minister Mark Vaile.
ASEAN’s recent trade agreement with China provides tariff-free access for Chinese horticultural products into ASEAN. Australian products will continue to be penalised by tariffs on arrival, further damaging our meagre market share in the region.
Access for citrus into Indonesia was identified as a key priority for Australia following the imposition of punitive tariffs in 2005. But these tariffs will remain on Australian citrus until a small reduction probably in 2028.
The flood of imports from Asia, coupled with Labor’s new industrial relations laws which also begin this week, are likely to devastate what is left of Australia’s food processing industries.
Under the deal, Australia has made substantial concessions immediately, but it will be 2020 or 2025 before tariff barriers are removed for some key Australian industry sectors, and some will never be removed.
Sugar provides a good case study. Mr Crean made much of the fact that the Australia – United States Free Trade Agreement did not include concessions on sugar. In March 2005 Mr Crean said: “We cannot allow that sort of thing to happen again.” In May last year he said: “Unlike the previous government, we’re not selling out Australian agriculture to pursue an FTA at any cost.”
“Mr Crean has failed on his own rhetoric. ASEAN countries take about a third of Australia’s exports of sugar, but most ASEAN signatories made no tariff concessions at all in the AANZFTA that Mr Crean willingly signed.
“In a further hit to Australia’s industry, Australia has offered a $20 million aid program to help AANZFTA countries crash into our markets. The Government is planning no such special assistance for Australian industry to access ASEAN markets.
“This is a very poor deal for Australia, despite the Government’s spin,” Mr Truss said.
