China-Australia Deal Could Be Bad News for Brazilian Beef Sector

11/18/2014 - 08h28

China and Australia announced a free trade deal on Monday (17) that will increase economic ties between the two countries and may have negative consequences for Brazilian beef exports to the Chinese market.

The agreement, ten years in the making, abolishes tariffs on Australian exports to China, benefiting in particular beef, wine and milk derivatives.

In return, the Chinese will face less barriers to investing in companies in Australia.

A declaration of intentions was signed in the Australian capital Canberra, during the visit of the Chinese leader Xi Jinping.

The final deal will be completed in the next year, with the aim being that 95% of Australian exports to China have zero tariffs within four to five years.

Tariffs on Chinese exports to Australia will also be cut.

The Australian authorities called the deal "historic", estimating that it may add US$20 billion to bilateral trade.

In 2013, trade between the two countries was worth US$150 billion. It is the third agreement of its kind signed by Australia this year, following other deals with Japan and South Korea.

"It's at least as good for our agriculture as New Zealand's agreement was," said Australian Prime Minister Tony Abbot. "Their dairy exports grew from US$500 million to more than US$3 billion."

The agreement takes place just as the Chinese market is about to be reopened for Brazilian beef exports, after two years of embargo following an atypical case of mad cow disease.

Brazil will begin exporting to China again in January, said Minister of Agriculture Neri Geller to Folha.

He also said he is not concerned by the agreement between China and Australia, as he is confident of the Brazilian beef sector's capacity for supply.

Last year, Australia accounted for 52% of the beef imported by China, at a total value of US$1.3 billion.

The agreement announced in Canberra puts Australian beef in a highly favorable position from which to continue dominating the market.

According to an estimate by the Australian news service Beef Central, a specialist publication for the red meat market, the agreement has the potential to increase Australian exports to China by US$270 million annually.

Translated by TOM GATEHOUSE

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	Apu Gomes/Folhapress
	The agreement puts Australian beef in a highly favorable position from which to continue dominating the market