SARAH FERGUSON: It's taken seven years of negotiations and an army of trade experts working through 12,000 lines of tariffs, but tonight, Australia has signed an historic free trade agreement with Japan. Agricultural producers amongst others had high hopes and slightly lower expectations, holding out for big wins on beef, dairy and sugar. But the devil will be, as he always is, in the detail. To discuss the new deal, I was joined moments ago by Trade Minister Andrew Robb in Tokyo.
Andrew Robb, welcome to 7.30.
ANDREW ROBB: Thanks very much, Sarah.
SARAH FERGUSON: First question: agricultural producers on this free trade deal had very high expectations. What were you able to deliver?
ANDREW ROBB: Well it's been a ground-breaking deal. Australia will be the first major agricultural exporter to unlock the very high import duties that apply in Japan. We've seen a very significant reduction in the beef tariffs. Beef, a currently $1.4 billion export market. We're going to see a halving of the frozen beef tariff and nearly that on the chill beef - an eight per cent drop in the first year. So it's going to give us a very major competitive edge with beef.
We've got wonderful results on cheese, we've got a whole range of horticultural products, almost all horticultural products where the tariffs and quotas and all the rest will be eliminated. Canned fruit, tomatoes, peaches, pears - all eliminated. All of the fruits, nut, mangos - all these sort of horticultural products. We've got services, significant services improvements, manufactured goods, elimination of all tariffs. And cars will be, cars from Japan on average will be about $1,500 cheaper per vehicle with the implementation of this trade deal.
SARAH FERGUSON: Alright. That sounds like a veritable cornucopia you've got happening there. Let's just get down to some of the detail. You said a 50 per cent cut for beef producers - that's presumably on frozen meat - but the key question is: over what period?
ANDREW ROBB: Well, the 50 per cent cut is on frozen beef, but on chill beef, it's nearly - it's only two per cent less all the way through. The chill beef finishes after 15 years. Frozen beef at 19.5 per cent tariff after 18 years. But the fact is that we've received very significant cuts in the first two years, so, eight per cent cut for chill beef, six per cent - eight per cent cut for frozen beef, six per cent for chill beef in the first year, then two per cent for frozen, one per cent for chill the next year. So there'll be a massive advantage.
Almost half the cut occurs in the first two years, which will give our beef industry the jump on every other beef exporter in the world and particularly the American market, which is great exporter and competitor in Japan for this meat market.
SARAH FERGUSON: Just briefly on the beef, though: given those very long implementation periods, will it actually lead to the opening up of new markets?
ANDREW ROBB: It will lead to a massive increase. And again, I'll repeat that to get to the 19.5 takes some years, but the half of that tariff cut occurs in the first two years. So, through the whole period, Australia will have a 10 per cent advantage over competitors - a huge advantage over competitors. It will mean hundreds of millions of dollars increase in our beef markets alone, as well as a 20,000-tonne quota for cheese, an increase in cheese, duty-free cheese, and a whole raft of other ...
SARAH FERGUSON: May I - sorry - I'm so sorry to interrupt you, but let me just come in on the cheese question because what I understand is that they were looking for an actual tariff reduction. Did you deliver that, a tariff reduction, as opposed to a change in the quota?
ANDREW ROBB: Well the quota that we have delivered of 20,000 tonnes is tariff-free and it does add to the $356 million of cheddar cheese that we already deliver to that market. It will be a significant increase, it will provide very important increase access with duty-free access into the market, as well as a whole range of other smaller dairy products, yoghurts and casein other things which we've had very limited, if any, access to. They could emerge into $100 million markets offer the next few years.
Let me ask you about the sugar, because I understand in the leadup that the cane growers - and you know all about what they were asking for - they were particularly looking to reduce the tariff on higher-grade sugar; that was the most important thing for them. Were you able to deliver that?
ANDREW ROBB: Yes, we were. They have got - they have got the tariff eliminated on higher-grade sugar.
SARAH FERGUSON: So there's no longer that differential between the low-grade and the high-grade sugar, is that correct?
ANDREW ROBB: We have delivered what they were seeking and we have delivered I think more than what was expected in a whole range of other agricultural areas. Horticulture is the sleeper. Horticulture is as big as the beef industry in Australia, but most of it is domestic consumption. What this has meant is that it will now become viable - there will be a margin, a good profit margin for a whole raft of Australian horticultural exports. And I think in the years to come as we sell not only to Japan, but the exploding middle class in the Asian region, we are going to see many billions of dollars of exports of horticultural products. It will be stimulated enormously by the deal that's just been completed today.
SARAH FERGUSON: What was the biggest disappointment for you in the deal?
ANDREW ROBB: I don't want to talk about disappointment, Sarah. Look, the fact we should be celebrating - it's been seven years in the making. That's probably the biggest disappointment I've had is the time that it's taken to complete this deal. We could've had these sorts of advantages for a long time. We now have pulled together a Korean free trade agreement in the last six months. The Japanese free trade agreement today.
The two Prime Ministers finalised it themselves, between themselves just half an hour or so ago and are now both fronting the press to express their great pleasure at the deal. But it's taken seven long years and our industries have not had the advantage that we are going to benefit from now in the years ahead and it is a shame that we've seen that waste of time.
SARAH FERGUSON: Andrew Robb, thank you very much indeed.
ANDREW ROBB: Thanks for the opportunity, Sarah.
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