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Tariff cuts spruiked as free trade at crossroads

Mathew Dunckley

The pursuit of free trade agreements remains a strong priority of the federal government in the face of threats from rising populist protectionism, particularly from US President-elect Donald Trump.

Mr Trump has vowed to withdraw from the Trans-Pacific Partnership on his first day in office in the most striking example of a backlash against globalisation that has buoyed nationalistic political movements around the world.

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But federal Trade Minister Steven Ciobo insists the deal could still survive and expressed confidence that Australians still supported the pursuit of such agreements.

"Australia is an exporting nation, It is a fundamental driver of the Australian economy. I think Australians fundamentally get that as a trading nation our economic strength is derived from our ability to trade," he told Fairfax Media.

"I respect that some people feel alarmed by trade, by talk of free trade, but I'm not going to take one backward step in being a strong advocate ... our wages, our living standards are inextricably linked to trade with the world."

Mr Trump will be sworn into office on January 20. Mr Ciobo is heading to America later in January for an annual event promoting Australia and hoped to have "discussions" with the new administration.

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He repeated comments he made in the wake of Mr Trump's pledge to ditch the deal that it was important to give "the Americans time" as there was still a long process to be finished.

"It is important to be a little more sophisticated than just looking at what President-elect Trump has said," Mr Ciobo said.

Mr Ciobo said Mr Trump's statements on trade, including threats to use punitive tariffs, were not part of an "anti-trade agenda", rather the new president was seeking to pursue policies that are good for America and its workers.

The Productivity Commission, and others, have called for independent and public assessments of the benefits of free trade agreements, but Mr Ciobo said the current processes were sufficient.

Mr Ciobo pointed to a list of 7000 Australian export products that will enjoy lower tariffs from New Year's Day – from milk powder and table grapes to bottled wine and beef – in China and Korea as proof of the benefits of the free trade deals with those countries.

Tariffs on many of those goods are now half those paid by competing countries, and Mr Ciobo said the volumes of trade in those products had increased substantially.

For example, bottled wine exports to China were up 42 per cent to $309 million in the first nine months of 2016 compared to the previous year, while frozen beef exports to Korea had jumped 48 per cent in two years to $653 million.

"The Turnbull government will continue to pursue an ambitious free trade agenda and agreements like ChAFTA to fuel our economy and create more jobs," he said.

Mr Ciobo said the government was in the middle of negotiations with Indonesia over a free trade agreement and preliminary discussions had begun with the British government over a new deal with that country following its vote to leave the European Union.

Asked about the impact of public calls from Australian politicians to limit or ban immigration from Islamic countries on the Indonesian talks, Mr Ciobo said it had "never been raised".

He also disputed the view that Brexit – Britain's exit from the European Union – represented a pushback against free trade.

"I always pull people up on that, and the fact is the May government have repeatedly made it clear that they want to be a beacon for free trade," he said.

"Brexit was a very strong pro-trade [moment]."

Key Chinese tariff cuts effective 1 January 2017:

  • Bottled wine tariff was 14 per cent before ChAFTA and was cut to 5.6 per cent on New Year's Day.
  • Ice-cream tariff was 19 per cent before ChAFTA and was cut to 7.6 per cent.
  • Milk powders (excluding for infants) tariff was 10 per cent before ChAFTA and was cut to 7.5 per cent.
  • Fresh table grapes tariff was 13 per cent before ChAFTA and was cut to 5.2 per cent.
  • Fresh or chilled boneless beef tariff was 12 per cent before ChAFTA and was cut to 8.4 per cent.
  • Fresh cheese tariff was 12 per cent before ChAFTA and was cut to 8.4 per cent.

Key Korean tariff cuts effective 1 January 2017:

  • Fresh or chilled beef tariff was 40 per cent before Korean free trade deal (KAFTA), was cut to 29.3 per cent on New Year's Day.
  • Frozen beef tariff was 40 per cent before KAFTA, was cut to 29.3 per cent.
  • Fresh, chilled and frozen sheep meat tariff was 22.5 per cent before KAFTA, was cut 13.5 per cent.

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