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Exports head north amid cuts to tariffs

By KARL WILSON (China Daily) Updated: 2016-05-26 17:22

Exports head north amid cuts to tariffs

The China-Australia Free Trade Agreement (ChAFTA) has been a game changer for Warren Randall.

"I would go as far as saying that it has been the most significant market change we have seen in the wine sector in the last 39 years," said the chairman of Randall Wine Group, the biggest private grape grower and winemaker in Australia.

"For years our biggest competitor in the Chinese wine market has been Chile," he told China Daily Asia Weekly from his vineyard in the Barossa Valley, South Australia.

"Chilean wines have zero import duties while we had to compete with duties of 14-20 percent on packaged and bulk wines.

"Since (ChAFTA) came into effect on Dec 20 last year, we have seen two cuts (in import duties) and by 2018 there will be no import duties … which will put us on the same playing field as Chile."

The Randall Wine Group currently exports 10-15 percent of its total production to China. But come Jan 1, 2018, when the final duty is removed, Randall said he expects the export figure to be around 40-45 percent.

"The Chinese love our (Australian) wines, but in the past the duties had made our products very expensive. What the FTA has done is level the playing field and made us competitive.

"China is an enormous market and with the ChAFTA it gives us greater access to that market. At the same time, it allows us to expand our business and employ more people here in Australia."

Since ChAFTA came into effect, there have been two rounds of tariff cuts on Australian exports to China. The agreement removes barriers to trade in goods, services and investment; it also strengthens Australia's cultural, social and political relationship with China.

More than 86 percent of Australia's goods exports to China will now enter duty free; this percentage will rise to 93 percent after four years, and 96 percent when the agreement is fully implemented.

For lobster producers, however, the benefits of the agreement have yet to filter through.

Andrew Lawrie of Sky Seafoods in South Australia said: "We have not noticed any change (due to ChAFTA) … but it is still early days." Sky Seafoods exports almost 100 percent of its southern rock lobsters, with most of it going to China.

"There is huge demand in China for our lobsters. The only problem we have is keeping up with that demand." China is Australia's largest market for southern rock lobsters.

New ventures show how some Australian businesses are already responding to the new opportunities in China. One such move is the partnership between vitamin and health supplement manufacturer Blackmores and Bega, the dairy company, to produce infant formula for the China market.

Managing director for Asia at Blackmores, Peter Osborne, said the company is "strongly supportive" of ChAFTA as it will deliver "significant benefits for Australia and Australian companies doing business with China".

"Blackmores exemplifies the position that China can take in an Australian business's Asia and global growth strategy," he said.

"Since launching in China in 2012, Blackmores has established itself as a high-quality premium natural health brand with Chinese consumers," Osborne said.

"Through the establishment of a wholly owned foreign enterprise in Beijing, and branch offices in Shanghai and the Shanghai Free Trade Zone, we have rapidly expanded our presence in the market."

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