Australia: Japan tariff reductions help "level the playing field"

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Australia: Japan tariff reductions help "level the playing field"

Last week a range of Australian fruit and vegetable industry bodies showed their optimism over the conclusion of a free trade agreement (FTA) with Japan, which will likely have significant consequences for other the two countries' agricultural sectors, as well as areas such as car manufacturing, electronics and education. To discuss the implications in more detail, Australian Horticultural Exporters' Association (AHEA) executive director Michelle Christoe spoke with about potential changes to an export dynamic that has stayed fairly static for a decade.

Even though Japan only has a 40% level of food self-sufficiency, Christoe highlights it is still a "small importer" of most fresh produce. mango-ataulfo_72504067 square

"The conclusion of the Japan FTA negotiations represent a significant milestone in trade negotiations by the coalition and a major opportunity for horticulture. This is an important move for Australian trade as Japan is a major trading partner," Christoe said.

"Whilst Japan is the second largest export destination for horticulture - worth AUD$64 million (US$60 million) - primarily due to citrus, exports have not varied much for the past ten years as pricing has been non-competitive.

"Reductions in tariffs help to level the playing field for Australia with other nations who have already achieved FTA agreements, for example Chile."

According to data AHEA has compiled from ITC Comtrade and Fresh Intelligence, Australia's fresh fruit exports to Japan grew by 24% in 2012-2013, however they were only slightly higher than values achieved in 2010-11.

During the period, oranges accounted for 85% of Australia's fruit exports to Japan with a value of AUD$34.8 million (US$32.8 million), while other key fruits included mandarins at AUD$3.5 million (US$3.3 million), mangoes at AUD$600,000 (US$564,894) and cherries at AUD$300,000 (US$282,444).

Christoe said the outcomes of the FTA looked "very good" for horticulture, while for some commodities it would bring an even stronger outcome than the recent South Korea FTA.

"Whilst details are still in negotiation, for horticulture it appears we have immediate elimination of many of the tariffs, with others phased out over 5, 10 or 15 years," she says.

"For example, for fruit: mangoes (3%), grapes (7.8%) and cherries (8.5%) will have elimination of tariffs when in season; and citrus (16%) and apples (17%) will decrease over 10 years.

"Whilst vegetables currently represent a smaller export market, Asparagus (3%) and carrots (3%) will be immediate elimination and onions (8.5%) over 5 years."

She highlighted that much of Australia's fresh produce, such as grapes and cherries, is counterseasonal to Japanese production.

"Therefore non-competitive and with the added benefits of proximity and taste, is appealing to Asian countries," she said.

"Japan is one of the most market access restrictive destinations. It is a market access priority for grapes; however Japan is currently a small importer of most fresh produce.

"Limited access from Tasmania for Cherries and Apples have difficult protocols that require costly compliance measures.  The AHEA and industry are working to overcome these issues to facilitate trade in conjunction with working with DFAT on supporting the free trade agreements."



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