Australian grain growers count cost of non-tariff trade barriers

08.05.2018

Australia's grain industry has warned that an increase in non-tariff barriers is undermining free trade agreements and shutting the nation's farmers out of some markets.

The warning comes as farmers in the US urge President Donald Trump to step back from a trade war with China.

The first comprehensive survey of non-tariff measures (NTMs) affecting the Australian grains industry identified 54 barriers across 15 countries, including key markets.

Some 35 per cent of NTMs resulted in either no or very restricted market access for Australian grains, while nearly 50 per cent resulted in either increased compliance costs or compliance risks.

Industry groups behind the report, partly funded by the Commonwealth, stopped short of naming and shaming the worst offenders amid concerns of inflaming trade tensions.

Many of the NTMs identified were sanitary and phytosanitary (related to the health of plants) measures, in particular maximum residue limits set above international accepted levels. Others included restrictive import permits and certification requirements, and government procurement policies.

GrainGrowers trade and economics manager Luke Mathews said that in some markets NTMs were more disruptive than tariff barriers.

"What we have seen over the past decade in particular – and seemingly increasing in prevalence in more recent years – is a rise in NTMs," he said.

"The challenge that industry faces with NTMs is they are much more opaque than a traditional tariff-related barrier. As a result of that it can be harder for exporters to comply with the requirements of NTMs and they can have a more disruptive effect."

Australia's exports of grain, oilseed and pulses reached record highs of $14.6 billion in 2016-17 despite trade barriers.

Australian governments have been effective

Grain Trade Australia chief executive Pat O'Shannassy said successive Australian governments had been effective in liberalising trade and removing tariffs.

"While tariffs and quotas are still important in some markets, in general they are now less restrictive and harmful for the grains sector than the emerging and growing NTMs that affect trade," he said.

The report said some countries were using NTMs to protect their domestic grain sectors.

"This is particularly the case for feed grains into south-east Asia, where practices aimed at protecting domestic corn sectors are limiting Australia's feed grain access and penalising the feed-milling sectors in those markets," it said.

India is not named in the report but its tariffs and NTMs are a major source of frustration in the Australian industry.

Battle with China

Australia is also supporting the US in its World Trade Organisation battle with China over grain import quotas.

The US maintains that global prices for wheat are much lower than China's domestic prices and that Beijing has shelved a lower-duties mechanism supposed to clear the way for the import of almost 10 million tonnes a year.

US Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) again urged Mr Trump to tackle his concerns about China's trade policies through the WTO.

The powerful farm lobby groups fear that wheat growers will be hurt by a 25 per cent increase in tariffs as part of China's response to new US tariffs on $US50 billion of imported Chinese goods. China imported 61 million bushels of US wheat in 2016-17, making it the fourth-biggest market for US growers.

USW chairman Mike Miller said farmers had invested a lot of money and time over the years to develop a Chinese market that had great potential to buy even more wheat.

"Now that effort is in jeopardy at a time when big global supplies have already pushed farm-gate wheat prices down to unsustainable levels," he said.

NAWG president Jimmie Musick said a drought, low prices and trade uncertainty added pressure to passing a Farm Bill on time, as well as creating uncertainty for growers and lenders.

USW and NAWG have said the proposed US tariffs represent unilateral actions that violate WTO rules.


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