Tuesday, December 23, 2014

China Reaches Free Trade Deal with Australia

On 17 November, talks between Chinese President Xi Jinping and Australian
Prime Minister Abbott in Canberra saw the two countries finished their free
trade agreement (FTA) negotiation. The agreement contains 2 parts. In the 1st,
all the products covered will enjoy zero-tariff status when exported to
Australia from China. In the 2nd, over 85% of the products covered will be
zero-tariff when exported to China from Australia, this proportion rising to
93% within 4 years and after this 95%
, according to Dairy
Products China News 1411
on November by CCM.

Tariffs on Australian dairy products entering China run up to 20%, but are
now to be removed completely over 4-11 years, dependent on the specific
Naturally there has been a positive reception in Australia. In a Melbourne
paper on 20 November one local dairy company - Vi Plus Dairy, operating from
the old Bonlac Toora factory - took out a major front page advertorial offering
their congratulations on the achievement of the FTA!
The FTA will influence trade in several ways:
    Tariff-free trade seems likely
to attract more Chinese dairy enterprises to invest in Australia, where milk
prices are lower and quality higher, a pattern familiar through other
food-security driven investments by the industry in New Zealand and Europe
    Australia will expand milk
output: this has been at a severely reduced level ever since the peak years
either side of year 2000.  As a side
effect, growth in dairy exports to China has the potential to reduce the
country's reliance on the export of rocks and minerals. Gary Helou at Murray
Goulbum, suggests higher payouts to dairy farmers can take the country from 10
billion litres to 20 billion litre. Many in the industry have doubted this
vision for a country which never quite reached 12 billion litres at its peak to
date, but the potential could be there IF wider issues such as water supply
allow; what does appear certain is that Australia will supply more dairy
products to China going forward than in the past.
    New Zealand will face more
competition in exporting dairy products to China. A notable aspect of the deal
which Australian negotiators have been quick to highlight is the absence of the
special safeguard terms present in the New Zealand FTA, which have contributed
to the rush to import early each year in recent times. Likely there will be
moves now by New Zealand to better its deal: a clause in the 2008 agreement
makes legal provision for improvements in trading terms extended by China in any
new trade deal to be automatically applied to its agreement with New Zealand.
    European countries will also
face stepped up competition at a time when milk production is rising and
expected to expand further after the quotas are gone.

Table of Content: 
Products China News 1411
South Korea to Expand Exports of Infant Formula to China
Challenges for Chinese UHT Milk Processors
Goat Milk Products Enjoy Huge Potential in China
Dairy Industry's Prosperity Index Increases Slightly in Q3
China Reaches Free Trade Deal with Australia
Danone Becomes Second Biggest Shareholder of Yashili
New Competitors in Infant Formula Market
Royal Dairy Cooperates with Irish Dairy Board
Price of Raw Milk in China Continues to Drop
Vitasoy Launches Premium Soy Milk
Three Infant Formula Processors Acquire Production License
Nanshan Animal Husbandry Builds Dairy Farms and Milk Powder Production
Guangxi Imports Large Numbers of Cows
Yantang Dairy's IPO Approved
Royal Dairy Sees Growth in Net Profit in Q3 2014
Jiangsu Province Streamlines Test Efficiency on Fresh Milk Imports
Subsidiary of Junlebao Dairy Cooperates with Ireland's Keenan
Milk Deluxe Launch New Product Series
Shaanxi Province Issues Merger and Consolidation Plan of Dairy Industry
Bright Dairy to Take over Tnuva by January

The Dairy Products China News is a monthly newsletter jointly published by
CCM and Orrani Consulting - an overseas dairy expert and a leading consultancy
specialized in the food/drink and ingredient sectors. It combines CCM
International's extensiveknowledgeoftheChinese dairy industry with Orrani's
specialization inthe global dairy sector. Dairy Products China News has an
In-depth and insightful analysis from CCM's experts, accurate market data and
first-hand information and a forecast on the development trend of the dairy
market. It brings you the latest information on new market and company
dynamics, new dairy products and consumption trend, new legislations and
policies and raw milk supply dynamics that are shaping the market.

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This article was provided by CCM, a leading
provider of data and business intelligence on China's chemicals market. Contact
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