While the tariff reductions under the Korean Free Trade Agreement (KAFTA) have been very beneficial to the Australian beef industry, one unfortunate side effect of the agreement was the inclusion of volume safeguard provisions. Korea has included these in all of its FTA's to-date including the agreement with the United Sates and the European Union but at different volume levels for each country. AMIC's position had always been to argue against safeguard provisions as they have the potential to distort trade flows which is what happened in 2016 and is now going to happen in 2017 as well. In 2016 the volume safeguards were triggered on October 14. This year it is a day earlier.
All product on the water on 14 October 2016 (i.e. bill of lading before that date) gained entry at the existing tariff of 32 per cent but all other shipments for the remainder of the year incurred a tariff of 40 per cent until the start of the next year. In 2017 the safeguard for Australia has increased to 164,046 tonnes and the import duty has fallen to 29.4 per cent.
Last Friday (Oct.13) the volume safeguard for Australia was triggered again and all further shipments not on the water at that date will incur a tariff of 40 per cent until the end of the year. This will give the US a 16 per cent tariff advantage for the remainder of the Year. The US has a 300,000 tonne beef safeguard as part of their FTA with Korea so they are nowhere near triggering their safeguard provisions.