Boom in Australian beef exports to US could trigger tariffs

By Poorna Rodrigo

- Last updated on GMT

Boom in Australian beef exports to US could trigger tariffs

Related tags Australian beef International trade Livestock

Strong sales of Australian beef to the US this year could see exporters use up the duty-free quota allocation available for these trades, resulting in tariffs to secure more American sales. 

Australian beef exporters are half way through their 2015 duty-free quota already, and “once it is filled, [the industry] needs to pay the normal duty”​ for beef shipments to America, a spokesperson from the US Department of Agriculture (USDA) told GlobalMeatNews​. These can be as high as 20% for high quality beef cuts, and 31.1% for veal.

Australia has reached 43% or 164,000 tons of the World Trade Organization (WTO) tariff-rate quota (TRQ) of 378,214 tons (to the US market) as of June 8. After filling this WTO quota, an additional duty-free 40,000 tons will be available as a result of the (2005) United States-Australia Free Trade Agreement, plus an additional 4,000 tons at reduced duty, the spokesperson said.

This would bring Australia’s total tariff-free quota to the US to 418,214 tonnes a year, according to Australia’s department of agriculture, which added it had now used more than 55% of it. Quoting Australia’s minister for Agriculture, Barnaby Joyce, the department said “above-average beef exports from Australia to the United States (US) could trigger the quota allocation system for the first time under the current beef export arrangements to the US market”​.

If Australia reaches 85% of its US beef export quota before 1 October, a quota allocation system will be triggered, Australia’s department of agriculture explained. “This will mean the remaining 15% of the quota would change from being first-come first-served to being allocated proportionally, based on the exporter’s record of shipment,”​ it said, adding: “Once usage of the quota reaches 65%, the department will contact exporters to start the process.”

The Meat Import Council of America (MICA) executive director Laurie Bryant said most US beef imports from Australia are grass-fed, lean trimmings processed into ground beef.

For 2015, total US beef imports are forecast to rise 6%, said a USDA spokesperson. “While shipments from Australia have risen strongly this year due to Australia’s drought-induced herd liquidation, the United States also imports significant volumes of beef from Canada, Mexico, New Zealand and other countries.”

Through April 2015, US beef imports were USD 2.5 billion or 409,000 tons. Imports from Australia totalled US870 million or 141,000 tons, accounting for nearly 35% of shipments, the spokesperson said.

The current momentum in Australian beef and veal exports is unlikely to continue. Australia’s Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) agricultural commodities report forecasts overall “a fall by 5% in 2015–16 to below 1.2 million tonnes, followed by a projected 3% fall in 2016–17”​.

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