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Agriculture's interests advanced in FTA with the US: Truss.

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DAFF04/012WT - 10 February 2004

Agriculture's interests advanced in FTA with the US: Truss

The interests of Australia's agriculture, fisheries and forestry sectors will be significantly advanced under the proposed United States Free Trade Agreement, Australian Agriculture Minister Warren Truss said today.

"Australia will gain from immediate improved access or tariff reductions for hundreds of primary products such as beef, butter, cheeses, milk powders, wine, seafood, lamb, avocados, peanuts, oranges and timber.

"Beef producers are set to gain $A22m in Year One of the proposed FTA - rising through $A80m by Year Two or Three - and dairy producers gain $A55m in new access from Year One." (Analysis of gains by commodity attached.)

But Mr Truss said he shared the disappointment of the sugar industry and others that the United States has not conceded more on agriculture.

"However, a deal with some gains for agriculture demonstrates progress in removing trade barriers, and is far better than no deal and no improved market access," Mr Truss said.

"These market access gains have been achieved without any concessions on our strict, science-based quarantine regime, and without compromising our single desk commodity marketing arrangements.

"The Prime Minister has already explained that the Government spent some time weighing up whether to abandon the whole deal because we could not get immediate access for sugar. But we came to the conclusion that walking away would not help sugar producers, but it would disadvantage the rest of the rural sector and other sections of the economy.

"Sugar producers are the victims of a corrupted world market that is depressing the sugar price to a level below the cost of production. In the past three years, the Australian Government has delivered more than $80 million in assistance to thousands of canefarmers and harvesters and their families.

"The Australian Government will consult with the sugar industry about providing additional aid over and above the most recent $120 million package of Australian Government assistance announced in late 2002. We are prepared to do more to help the sugar industry to position itself for the future or to help those who want to leave.

"But we do not control the sugar price. What we can do is help the industry in practical ways, and I today call on the newly re-elected Beattie Government to now listen to farmers and also act to help farmers by reducing farm costs.

"The only assistance the Beattie Government has provided is about $500,000 in loans to just 26 cane farmers. But at the same time, Premier Beattie has increased water and electricity costs in order to plunder profit

dividends from State-owned corporations like Sunwater, Ergon and Energex. If Mr Beattie wants to be constructive, he has the power to act immediately to lower the cost of sugar production."

Media backgrounder -the gains for Australian agriculture

Key outcomes and some initial estimates of their value are as follows:

1. Beef:

● Immediate elimination of the in-quota duty of US$4.4c/kg

(this is worth around A$22.2m in years in which the full beef quota is achieved). ● Quota increase of 15,000t in year 2, increasing to 70,000t

(18.5 per cent increase) by year 18. (15,000t access would be worth around A$60m in additional exports rising to A$280 million at current prices in year 18). The year 2 increase is subject to US beef exports having returned to 2003 levels. ● A price based post-transition safeguard applies to exports

over a specified amount based on growth from the quota in year 18. The US also has discretion to not apply the safeguard. ● 18 year phase out of the out-of-quota duty beginning in

year 9, with one third of the duty phased out in years 9-13 and the remainder phased out in years 14-18. ● Free trade in year 19, albeit with a permanent safeguard.

2. Dairy:

● In-quota tariff rates for items with specific country quotas

for Australia to go to zero immediately. ● No change in over-quota tariffs.

● Additional quota access for specific dairy product categories

amounting to around A$55m in year 1, increasing on average at 5 per cent . This will result in additional access of a total of around A$75m in year 10 and A$135m in year 20. (Current quota-regulated dairy exports from Australia to the US is around A$36m). ● TRQs remain in place post-year 20, with growth rates as


3. Sugar:

● No additional access is provided for sugar, but no loss to

existing market and no concessions made to US.

4. State Trading Enterprises:

● Single desk arrangements are preserved.

● A clause has been included that commits the US and

Australia to work together in the WTO to develop a comprehensive package on export competition measures that would include elimination of restrictions on rights to export.

5. Sanitary and Phytosanitary Measures (Quarantine):

● The integrity of Australia's quarantine regime and our right

to protect animal, plant,and human health and life are preserved. Decisions about market access on quarantine or food safety grounds will continue to be made on the basis of science.

6. Other items:

● Horticulture: Immediate tariff elimination for oranges,

mangoes, mandarins, strawberries, fresh tomatoes, cut flowers, olives and fresh macadamia nuts. New market opportunities have been created by the establishment of country specific TRQ volumes for avocados (4,000t initially) and peanuts (500t initially). ● Wine: Tariffs facing Australian wine will be phased out

under a harmonised scheme over 11 years (value of this tariff elimination is around A$10m a year when free trade is achieved). ● Cotton Seeds: Immediate elimination of the 4.1 per cent

tariff on cotton seed exports. (value of this tariff elimination is approx A$3 million a year). ● Wool: Tariff elimination of the 3.7 per cent tariff for greasy

wool over four years. (value of this tariff elimination is approx A$0.9m a year once eliminated). On other wool lines of industry interest (scoured and carbonised wool) tariff elimination will be in equal annual installment over 10 years. (value A$0.25m a year). ● Sheepmeat: Immediate elimination of all lamb and mutton

tariffs, with one exception (mutton carcasses and half carcasses, fresh or chilled, to be phased out over four years - not an industry priority). (value A$1.5m a year). ● Seafood: Immediate elimination of all tariffs on seafood.

This will benefit Australia's A$140m a year export trade, particularly in crabs and canned tuna. ● Wheat Gluten: Tariff elimination over 18 years for wheat

gluten to be used for other than animal feed (value around A$3.2m a year after elimination). Immediate elimination of the 1.8 per cent tariff on wheat gluten to be used as animal feed (value around A$0.2m a year). ● Cereals: Immediate tariff elimination of all cereals and

cereal flour lines of industry interest. ● Processed food: Some processed food items of industry

interest will be phased out over four years (eg: baby food preparations, some mixes for baker's wares, pineapple and grapefruit juice, fruit juice cordials). ● Forest products: All tariffs on wood and wood product

categories go to zero immediately.

Further media inquiries:

Minister Truss' office: Tim Langmead - 02 6277 7520 or 0418 221 433

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