Australian dairy exports will receive a boost from tariff reductions and expanded access into several lucrative markets after the federal Senate voted 33-15 to ratify the $15.6 billion Comprehensive and Progressive Trans Pacific Partnership (TPP-11).
Peak dairy industry body the Australian Dairy Industry Council (ADIC) touted the outcome as a significant victory for the dairy industry.
The 11 member countries, including Japan (Australia’s largest cheese customer) and Canada and Mexico (two countries that don’t have existing trade agreements with Australia), collectively represent 32 per cent ($1.1bn) of the total value and 35 per cent (298 thousand tonnes) of the total volume of Australian dairy exports.
Australia exported more than $540 million of dairy and dairy based products to Japan during the last financial year. The TPP-11 is expected to yield major benefits for dairy exports to the region, including:
- Phase out of tariffs, over 15 years, for cheeses including natural cheese for the production of processed cheese and cheese for shredding with the exclusion of mozzarella;
- Phase out of tariffs for fresh cheese with a fat content less than 45 per cent;
- For other varieties such as processed cheese, there are modest improvements in access;
- Major liberalisation of access for whey; and
- Modest tariff rate quotas established for skim milk powder and butter.
Benefits for Australian trade with other signatories include:
- Canada – tariff rate quota access to be established for a range of dairy products, including milk, cream, skim milk powder, whole milk powder, whey powder, butter and several cheese categories.
- Malaysia – quota volumes for liquid milk access.
- Mexico – tariff rate quotas for milk, skim milk powder and whole milk powder, evaporated milk, condensed milk, butter, and various cheese lines.
- Peru – tariff elimination on several products, although price band system to be retained. Products include fresh milk, milk powders, yoghurt and buttermilk, whey, butterfat, and cheeses.
- Vietnam – tariff elimination on various dairy lines over periods of zero to four years, including liquid milk lines, skim milk powder, whole milk powder, condensed and evaporated milk, yoghurt, buttermilk, butter, dairy spreads, anhydrous milk fat, butter oil, ghee, and several cheese lines.
The ADIC praised the federal parliament for supporting an agreement which will also support the 38,000 people working on dairy farms and in manufacturing plants who contribute $13.5 billion to the Australian economy.
The Australian dairy industry now anticipates Australia being one of the first countries to bring the TPP-11 agreement into force. The TPP-11 agreement is good news for Australia, and good news for the Australian dairy industry.