The implementation of the Australia-US Free Trade Agreement (AUSFTA) in 2005 eliminated or reduced tariffs on many commodities to induce trade between the two countries. But has the agreement delivered as promised and with the US pitching about in the economic doldrums, what’s the future look like for US-Australian trade?By George Lauriat, AJOTBy chance if you were shopping in your local supermarket in LA or the Big Apple, you might have come across an unusual promotion, “G’Day USA.” Australia’s largest foreign country promotion is held annually in the US to introduce Australian products directly to the American consumer. The promotion (January 2-31) features more than forty Australian businesses displaying their specialty food and wine products in supermarkets in Los Angeles and New York. It’s a high-end affair, aimed at taking a bigger slice of the US boutique food business. In New York, Citarella is hosting a “Down Under” promotion for a second year that includes all seven stores across Manhattan and the Hamptons. On the West Coast, Bristol, the Los Angeles-based upscale supermarket chain, is showcasing Australian gourmet food and wine in its fifteen stores. The promotions feature food items such as Wagyu beef, lamb, olive oils, fruit paste, cheeses, seafood and wine provided by some forty Australian food exporters. The “G’Day USA” promotion is notable for a number of reasons. Firstly, it is aimed at America’s top specialty food retailers – a high-end business, that is a tough cookie to crack. Secondly, the promotion must be taken within the wider context of the bilateral Australia-US Free Trade Agreement, which entered force in 2005 and Australia’s overall trade position. The products being touted include among others, Greg Norman’s Signature Wagyu Beef, Brookfarm macadamia mueslis, nuts and oils, Valley Produce Company truffle infused honey and fruit pyramids, Red Island and Yellingbo olive oils, King Island and Dairyvale cheeses.
Sally-Ann Watts, Austrade’s Senior Trade Commissioner in Los Angeles, said that “This promotion with Bristol Farms and Citarella throughout January will raise the profile of Australian fine foods and target American consumers and key decision makers at some of America’s top specialty food retailers in one of the largest markets in the world, home to some 42,000 supermarket stores.” Background: AUSFTAThe AUSFTA agreement was really a package of accords that reduced or eliminated a wide variety of tariffs and quotas while streamlining US and Australian protocols on a range of service sectors including finance, customs, intellectual property and education. The implementation of AUSFTA on January 1st 2005 opened up the US market to Australian products by reducing duties on more than 97% of US non-agricultural tariff lines, notably excluding textiles and clothing. It also gave Australian access for the first time to the US Federal Government procurement market of $200 billion a year. Another significant gain for Australian exporters is the elimination of the 25% tariff on light commercial vehicles, and similar tariff elimination on vehicles and parts. Equally all metals and minerals are now duty free which is particularly important to Australia’s aluminum industry. Probably the sector to gain the most from the accord was the Australia’s farmers and food processors. Under AUSFTA nearly 66% of agriculture tariffs were waived, with a further 9% going to be eliminated by 2009. This tariff elimination applies to and includes lamb and sheep meat producers while beef and dairy quotas were increased. Tariffs on horticulture products such as avocados, oranges, mangoes, mandarins, strawberries, tomatoes, cut flowers, and fresh macadamias were dropped. Quotas on seafood also dropped. Tariffs on processed foods were also dropped. And the tariffs on some traditional exports like wool and wines will be phased out. From the U