North West cattle producers are enjoying memorably high market prices as the industry slowly recovers from drought. But the recent US withdrawal from the Trans-Pacific Partnership (TPP), a disappointment for member country Australia, poses questions for the industry’s stability.
“(If) we survive from everything that happens over (in the US); we’re such a major partner- major ally, if they’re going to become protectionist, we might just be in a heap of trouble,” Inverell stock agency principal Bob Jamieson said.
“We’re only protected at the moment by a freakish undersupply of beef; it’s the lowest in 10-20 years. If we hadn’t had the drought 18 months ago, cattle prices would be nothing right now.”
US President Donald Trump signed off the withdrawal from the TPP on January 23, declaring domestic interests first. He stated it was more lucrative for the superpower to cherry-pick its trading relationships, calling them fair trade, rather than free-trade, for a country Mr Jamieson said has an oversupply of quality beef.
”Where it could really blow up in our faces, that little partnership (the TPP) represents 40 per cent of the world’s economy, so if they do as they say, and start picking and choosing their partners, if they get very specific and do deals, that could affect us,” Mr Jamieson said.
He said Australia had the benefit of disease-free cattle, and paddock-to-plate traceability, besting bigger growers, and attractive to markets deterred by President Trump’s recent inflammatory rhetoric, such as other Commonwealth countries, or Mexico. “That’s a wonderful market for us to get into,” Mr Jamieson said.
Pundits speculate China might fill the gap beside the remaining 11 nations. A spokesperson for Member for New England and Minister for Agriculture Barnaby Joyce said conversations were already underway, as the TPP was structured to permit other neighbour countries to join, such as China, Korea or Indonesia.
If they do as they say, and start picking and choosing their partners, if they get very specific and do deals, that could affect us.
“The Australian government has been discussing, at length, with its TPP counterparts how it would take the deal forward if the US was absent, including talks with Japan, Canada, Mexico, Singapore, New Zealand and Malaysia, to ensure the benefits of the TPP are not lost,” the spokesperson said.
The spokesperson said despite the US withdrawal, Australia has had the existing bilateral Australia-United States Free Trade Agreement (AUSFTA) since it entered into force in 2005 and said that top export market, worth A$2.5 billion in 2015-16, was now in year 13 of annual increases in duty free tonnage for beef into the US market, which in year 19 (2022), will become unlimited tonnages with zero tariff.
The US aside, the spokesperson said Australia was pursuing optional, improved FTAs through working toward or negotiating with Indonesia, the EU, and the Regional Comprehensive Economic Partnership (RCEP) which involves ASEAN10 + China, Japan, Korea, India, Australia and New Zealand.
“Just last week the Deputy Prime Minister was in Berlin to attend the G20 Agriculture Ministerial Meeting to discuss global agriculture, water and food security trends, and also conducted bilateral meetings with his ministerial counterparts from a number of Australia’s key trading partners, such as the EU, Germany, UK and China, to discuss agricultural market access and trade,” the spokesperson said.
“The Department of Agriculture and Water Resources is also negotiating separate technical market access protocols for live cattle and beef, such as the protocol for live slaughter/feeder cattle into China, with the first sea shipments expected in coming months.”
Nevertheless, Mr Jamieson said it was wise for beef producers to remain aware, and follow their business plans, with a vigilant eye on US activity.
“There’s an old saying in the beef industry: ‘If the Americans sneeze, we catch a cold’, we’re just that closely aligned to them we are such major trading partners, we have to watch closely what’s happening over there, “ he said. “Because if it turns out bad, it will turn out really bad for us.”