Australia: New year brings elimination of tariffs on Australian barley to Mexico

The new year has triggered new tariff arrangements which have potential to expand export market opportunities for Australian grain, the Grain Central reported on January 12.

The most promising of the trade developments that took effect from January 1, 2022, is the complete elimination of tariffs on Australian barley to Mexico.

Australian barley exports to Mexico attracted tariffs of 15 per cent until December 31, 2021.

Under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), that dropped to zero on January 1, 2022.

“Tariffs on barley to Mexico will be eliminated completely, further enhancing our competitiveness,” Minister for Agriculture and Northern Australian David Littleproud said in a January 1 media release announcing new tariff reductions and market access improvements that took effect the same day.

Mexico became Australia’s largest market for malting barley exports in 2021.

This was largely the result of severe punitive duties applied on Australia’s exports to China following the anti-dumping and countervailing duties investigations, which completely halted the trade in Australian barley to China.

These developments resulted in Australia’s first shipment of barley to Mexico in 2021, valued at more than A$69 million, “a fantastic achievement,” Mr Littleproud said.

The access in 2021 was also aided by the drought in Canada which normally supplies malting barley to Mexico, Grains Industry Market Access Forum (GIMAF) executive manager Tony Russell told Grain Central this week.

Mr Russell said Australian barley should continue to flow and be very competitive into Mexico at least until the next Northern hemisphere crop is available later in 2022.

“The shipments of Australian malting barley to Mexico in 2021 have provided an excellent opportunity for the local maltsters and brewers to experience the quality advantages of Australian barley – hopefully this will lead to a ‘quality advantage’ for Australian barley into the future and sales will continue in spite of renewed competition from Canada and others.”

Another potential opportunity for Australia’s grain industry under new trade arrangements lies in the continued expansion of Tariff Rate Quotas for Australian feed grain exports to Indonesia under the Indonesia-Australia Comprehensive Economic Partnership Agreement.

However, this measure appears far less likely to deliver tangible opportunities for Australian exporters in the short term at least, due to continued uncertainty surrounding how the Indonesian Government will manage the new arrangements.

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) entered into force on 5 July 2020 and provides access into the Indonesian market for 500,000 tonnes of Australian feed grains (wheat and meslin not fit for human consumption), barley (other than seed) and grain sorghum (other than seed)) at a 0 per cent in quota tariff.

The agreement provided for the tariff rate quota volume to grow at 5pc annually.

The tariff-free quota volume lifted to 525,250 tonnes in 2021 and to 551,250 tonnes on January 1, 2022.

Despite these arrangements having been in place for two years, Australia has not sent feed grain to Indonesia under IACEPA, with the possible exception of wheat that may have been exported for milling but which instead was on-sold by mills into the Indonesian stockfeed sector. Any volumes that may have gone through this channel are not clearly documented.

Mr Russell said the IACEPA opportunity for feed grains was still unrealised as Indonesian authorities have yet to issue import permits due to concerns about the impact on domestic corn producers in Indonesia.

A source close to Indonesia’s agriculture sector told Grain Central that opportunities to import feed grain to Indonesia have also been limited by an Indonesian Government decision which only allows for feed grain to be imported by a single Government agency, and not by stand-alone commercial entities, which has further restricted free trade opportunities.

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