ABC | 10 November 2017
Peru-Australia free trade deal to boost sugar, beef, rice and wine for exporters
By Tom Major, Chloe Chomicki and Charlie McKillop
Australian exporters will soon have market access to one of Latin America’s fastest growing economies with the signing of the Peru-Australia Free Trade Agreement (PAFTA).
A number of key of agricultural commodities will gain duty-free entry to Peru including sugar, beef, rice, dairy, almonds, sheep meat and wine.
In a statement, Prime Minister Malcolm Turnbull said the agreement is an excellent outcome, that will eliminate 99 per cent of stiff tariffs that Australian exporters currently face.
"The export deal will generate economic growth and Australian jobs for decades to come," Mr Turnbull said.
"Our businesses, farmers and families are the big winners."
Peru is a major food importer with $6 billion of agricultural goods imported last year.
However, Australia only exported $5.3 million dollars worth because of tariff barriers and preferential access for competitors like the United States.
Queensland Treasurer Curtis Pitt welcomed the opportunity to increase that figure.
"Peru has a population of 31 million and a GDP of around $189 billion, (but) our two-way trade now is only around $500 million dollars, so the potential for expansion is real," Mr Pitt said.
According to DFAT, Australia’s sugar market access is more than any other exporting country has achieved in the past 20 years and equivalent to roughly 30 per cent of Peru’s sugar imports.
Around 30,000 tonnes can be exported initially, doubling to 60,000 tonnes over five years and representing about three per cent of Australia’s sugar exports.
Canegrowers chairman Paul Schembri backed the deal, citing the need to develop new markets.
"A grower will now be confident that if we can grow the cane we can sell it to multiple market destinations rather than it being confined to four to five base customers," he said.
"Free trade agreements do work. If you look at Australian agriculture, if you look at the Australian sugar industry, we’re not subsidised.
"We’ve had to fight for everything we’ve got in terms of market access and we need to do it on a competitive basis."
Hinchinbrook MP Andrew Cripps, whose electorate covers the fertile cane fields of the Tully and Herbert regions, said it was a boon for the sugar industry.
Around 85 per cent of Queensland’s sugar is sold in raw form, with northern growing areas providing the lion’s share of those exports.
"This is a huge boost for the industry and in particular the north Queensland region," he said.
"Free trade agreements and market access mean jobs and opportunities for our agriculture sector, for our farmers and for jobs in country towns."
There will be immediate duty free access for Australian sheep meat, most wine and most horticulture products, kangaroo meat and wheat.
The Federal Government said the PAFTA delivers huge wins for Australian businesses with market access outcomes that go well beyond the Trans-Pacific Partnership (TPP) agreement.
Export Council of Australia board director Andrew Hudson said even though Peru is a relatively small trading partner, the deal will be beneficial.
"It’s an important part of our move towards the Americas other than North America, so we’re sort of initiating an opportunity there," Mr Hudson said.
"North America seems to have shut the door a bit, so you look at Latin America as being a significant growth market.
"It will be very good for the agricultural sector. Not just for primary producers, but also for manufacturers of mining equipment which is currently our top export."
Mr Hudson said he did not believe the granting of free trade entry to Peruvian products would majorly disrupt any local industries.
"I think we’re well placed to deal with any increase in Peruvian imports," he said.
Mr Hudson nominated Peru’s wine and vitamin supplement industries as potential competitors for the Australian sector.
"That’s always the nature of the deal, that you’ve got to give something up to get something on the other side," he said.
"I think on balance this has significant positives for Australia compared to potential threats from competition."
Australia-Peru FTA winners:
Sugar: on entry into force of the agreement, Australia will have duty free access for 30,000 tonnes of sugar into Peru, growing to 60,000 tonnes in five years and 90,000 tonnes in 18 years. This is more than any other sugar exporting country has achieved in the last twenty years.
Beef cuts: tariffs of up to 17 per cent will be eliminated within five years. This ensures Australian beef farmers will have duty free access to the Peruvian market at the same time as US farmers.
Dairy: on entry into force of the agreement, Australia will have duty free access of 7,000 tonnes of dairy products into Peru, growing to 10,000 tonnes in five years.
Rice: on entry into force of the agreement, Australia will have duty free access of 9,000 tonnes of dairy products into Peru, growing to 14,000 tonnes in five years.
Sorghum: on entry into force of the agreement, Australia will have duty free access of 15,000 tonnes of dairy products into Peru, growing to 20,000 tonnes in five years.
Sheep meat: tariffs on all sheep meat up to 9 per cent will be eliminated on entry into force of the agreement.
Seafood: Peru will eliminate all tariffs up to 9 per cent on entry into force.
Almonds: immediate elimination of duties on all tariff lines up to 9 per cent.
Wine: immediate elimination of duties across lines of commercial interest to Australia with the remainder being phased out over 5 years, up to 9 per cent.
Wheat: tariffs on all wheat up to 9 per cent will be eliminated on entry into force of the agreement.
Mining machinery and parts: duty free access locked in across all tariff lines.
Iron, steel and aluminium: duty free access locked in across all tariff lines.
Mining equipment: duty free access locked in across most tariff lines.
Base metals: duty free access locked in across all tariff lines.
Raw hides and skins: duty free access locked in across all tariff lines.
Mining Equipment Services and Technologies (METS) and oilfield service providers: Peru has granted access on non-discriminatory terms to Australian suppliers of mining-related consulting, research and development, engineering, environmental, mining and technical testing and analysis services.