Jan Davis: There’s a good chance we’ll regret this complacency in the future.

When you hear the term free trade agreement, you could be forgiven for assuming that what is being discussed is an agreement for free trade between two nations: a level playing field for the producers and manufacturers from both of the partner countries, a trading floor, a marketplace in which they will compete on even terms. Unfortunately, that’s not quite the picture.

In most instances, where Australian producers are concerned, a free trade agreement (FTA) is anything but a level playing field.

Why? Because, in Australian agriculture, we operate in an unprotected zone. Australia does not impose tariffs on imported goods that compete with our agricultural produce.

On the face of it, Australia appears to have secured the first two wins of a trifecta on free trade agreements (FTAs) in Asia, with South Korea and now Japan signed up. Now there is only China to go and then, in theory, we can all enjoy the fruits of the Asian Century.

I believe in a free and open market ­in a real world; and I am not suggesting we should return to imposing tariffs However, too often we are the only ones who operate with these halos around our heads, virtuous to the core, with our farmers barely operating profitably beyond the cost of production.

Let me explain.

In the soon-to-be-ratified FTA with South Korea, Tasmanian milk powders will be excluded because the US and the European Union have already filled the quota that South Korea allows from imports upon which tariffs are relaxed. Any Tasmanian imports will be subject to a tariff of 176 per cent. So if we sell to the Koreans for $100, they impose a price of $276 to protect their own local producers. There is a 36 per cent tariff on Australian cheddar cheese which will be eliminated in 13 years; the tariff on cream cheese will be gone in 18 years; and in 20 years, all cheese tariffs will have been eliminated. By that time, a generation of Australian dairy farmers will have come and gone.

At the same time, Australia imposes no duties on imported Korean yoghurt, ice cream and some milk powders.

On Monday night, the Australian Government announced the signing of an FTA with Japan with great fanfare; and especially highlighted the fact that Australia had achieved some significant gains for agricultural products. That is true. However, if you look at the detail, it is not all it is cracked up to be. It is not a level playing field for farmers.

Next comes the big one – China. Farmers argue that Australia should be in no haste to complete an FTA with China, even though we are six years behind New Zealand in doing so.
The Chinese drive a hard bargain. We need to know that, in seeking to open up new markets for Australian goods, we don’t open the floodgates for access of Chinese goods into Australia or that we don’t disadvantage one sector, eg farmers, in order to maximise market advantage for another, eg miners or energy generators.

Australia obviously wants greater access to China’s highly protected agricultural sectors, but can we expect a level playing field? Hardly.

Our agricultural exports to China attract average tariffs of more than 21 per cent; yet there are few tariffs on any of their products coming into this country. Beijing wants the best of both worlds. It wants to pay for foreign expertise and technologies to improve domestic productivity, but resists imports. We should be in no haste to sign on the dotted line with China.

We recognise that the Australian government has demonstrated its commitment to complete agreements with key trading partners, such as South Korea and Japan. We also understand the difficulties involved with negotiating such agreements, and we acknowledge the work that has gone into securing these agreements.

However, we are disappointed with the overall outcomes for agriculture; with a number of sectors facing marginal improvements or limited commercial gains phasing in over many, many years.

Federal Liberal MP for Murray Sharman Stone recently wrote:
“…it seems Australian farmers often take the bullet so our energy and minerals, services and the investment sector can enjoy even greater access.”

She is right. We are the bunnies.

Other countries recognise the importance of ensuring a domestic food supply, and they offer protection and sometimes even subsidies to ensure their farmers survive in a highly competitive international marketplace.

In contrast, Australians believe that our farmers can be left to compete when the field is weighted against them; and don’t seem to care if that proves not to be possible. There’s a good chance we’ll regret this complacency in the future.
TFGA CEO Jan Davis’ Mercury column today