The federal government is working away behind the scenes to save one of the most important offshore markets for Australian beef producers.
Australia’s highest value beef market on a per kilo basis, EU grainfed quota 481 for no-hormone beef, is being squeezed between the United States, the European Union and the complex rules of the World Trade Organisation.
“I’m well aware of the EU’s intentions to renegotiate the operation of their 481 quota and I have raised our concerns directly with the EU Commissioner for Trade on multiple occasions,” said Trade Minister Simon Birmingham.
“The EU has made clear the outcome of this process will be fully in line with WTO rules and we intend to hold them to that undertaking.”
The EU has opened a formal review of the tariff, prompted by US complaints its beef exporters had been shortchanged under a complex series of trade arrangements.
Australia takes the lion’s share of the EU’s 45,000 tonne tariff-free import quota, which was worth $250 million in the past financial year. Other EU exporters include New Zealand, Uruguay and Argentina.
WTO rules require that any change to quotas like 481 be negotiated between all interested parties, but mid-sized economies like Australia have limited bargaining power with large economies such as the US and EU.
The EU market is worth even more to Australia than its stated value, as the high value market puts a floor under cattle prices.
In 1989 the EU reacted to political pressure and banned hormone treated beef, after public opinion in EU states turned against the practice which dominates US production.
WTO rules permit such bans, but only when it is backed by scientific evidence, but the US disputed the move, arguing there was insufficient evidence for the ban.
In 1997 the WTO’s dispute resolution body sided with the US.
Instead of opening access to hormone beef, which would be politically untenable, the EU established the tariff free quota for hormone free beef.
The WTO ruled the EU’s ban was unscientific and authorised the US right to wage retaliatory tariffs against the EU, which would likely fall on automobile exports.
The US has sat on its hands, until now.
Until now there has been scant demand from US producers for hormone-free exports and other countries, including Australia, have taken advantage of EU market access.
Mr Birmingham said Australia would look to leverage the same EU rules as the US.
“Under the WTO rules the EU must consult with Australia and other substantial suppliers before it can reach any agreement with the US to change the operation of the quota,” Mr Birmingham said.
“Our government acknowledges that many Australian farmers have invested considerable amounts to meet the high standards necessary to supply beef within this quota. We will stand up for our farmers and continue to advocate strongly on behalf of our world class high quality beef producers.”
Trade advisory ITS Global’s principal consultant Jon Berry said agriculture is often used as a bargaining chip when big economies clash in the WTO, and it wouldn’t be unprecedented for the EU to grant county-specific access to the US.
“Our analysis is that in practice, if the EU wants to make amends with the US through quotas than a small economy like Australia doesn’t have a lot of clout to negotiate.
“The negotiations between Australia and the EU over a free trade agreement provide a forum to talk about the quota, but it’s unlikely Australia could stop the EU from taking away some of its access.”
With Shan Goodwin
The story Market access: Birmingham beefs up EU quota efforts first appeared on Farm Online.