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Australian Dairy Companies Applaud New China-Australia Free Trade Agreement

All Tariffs On Australian Dairy Products Will Be Removed Within 4 To 11 Years

Australian dairy organizations and companies are praising the China-Australia Free Trade Agreement (ChAFTA) for its potential to expand Australia’s dairy exports to China.

The agreement, which was signed Monday by Australian Trade and Investment Minister Andrew Robb and Chinese Commerce Minister Gao Hucheng, will remove all tariffs on Australia’s dairy products (which can be as high as 20 percent) within four to 11 years.

China represents 30 percent of global dairy imports, according to the Australian Dairy Industry Council (ADIC). China is Australia’s fastest-growing dairy market.

With demand for dairy in China expected to rapidly increase in the coming years, stable and open trade with China is a key in order for Australian dairy to capitalize on this opportunity for growth, ADIC said. Noel Campbell, ADIC chair, said in the long term, the agreement will enable the industry to flourish and capitalize on robust demand in the Chinese market.

“The FTA (free trade agreement) will strengthen Australian dairy’s competitiveness by providing our industry with a significant advantage compared to other countries in the market that do not have a FTA with China,” Campbell said. “It also puts the industry on a more level playing field against key competitors in the Chinese market, such as New Zealand.”

Under the trade agreement, the Australian dairy industry will be able to further develop its long-term relationship with China to the mutual benefit of both countries, ADIC noted. Australia’s dairy industry can expect positive flow-on effects throughout the supply chain, in particular through substantially reduced tariffs on key dairy products such as cheese, milk powder, infant nutrition and packaged milk.

While the ADIC has not yet been able to review the trade agreement in its entirety to fully quantify the benefits to dairy, Campbell has commended the overall outcomes of the deal.

“This is truly a free trade agreement,” Campbell said. “Australian dairy has been a leading commodity in the negotiations with China; we have campaigned long and hard for a positive outcome and are thrilled to see this come to fruition.”

Last year, Australia exported 109,790 tons (242 million pounds) of dairy products worth AU$461 million to China, 16 percent of total Australian dairy exports by value for the calendar year.

Devondale Murray Goulburn (MG), Australia’s largest dairy company, joined the ADIC in welcoming the China-Australia Free Trade Agreement. Exports accounted for more than 51 percent of MG’s revenue in its previous financial year, with the company exporting AU$1.5 billion, including more than AU$200 million to China and Hong Kong in the form of cheese, milk powder, infant nutrition and drinking milk.
“Chinese customers and consumers trust the quality and safety of Australian dairy products, and increasingly seek it as a premium choice in both the ingredients and grocery dairy foods,” said Gary Helou, MG’s managing director. “Therefore it is vital that Australia has excellent and competitive access to the growing and strategic China market.”

While MG and the dairy industry need to review the FTA’s details, Helou said the deal seemed to tick all the boxes sought in a good agreement.

“The first objective in this FTA was to begin to redress the disparity between Australia and New Zealand dairy trade to China. Second was to achieve a pathway to total free trade providing a competitive advantage and protecting Australia’s long-term competitiveness in China. It seems these objectives have been delivered,” Helou said.

MG has plans to grow in China, he stated.

“MG is already investing in its manufacturing footprint to provide world class dairy foods to China and southeast Asian consumers,” Helou said. “The China FTA will further cement MG as a first choice dairy foods supplier to the China market and this will s ..Send more more information