Tariff cuts help boost seafood profits

Tariff cuts are making Australian seafood more attractive for consumers and importers in North Asia, with demand on the rise

By Free Trade Agreement Division, Department of Foreign Affairs and Trade

Australia’s free trade agreements (FTAs) with China, Japan and South Korea are giving Australian fisheries businesses a competitive edge in North Asia. In 2015-16, these three powerhouse economies together accounted for 53 per cent of Australia’s total goods exports. And with strong outcomes for a broad range of seafood products, there are significant opportunities for the Australian seafood sector to make further headway into these promising markets.

The tariff reductions under each agreement vary, so producers need to ensure they understand the outcomes for their specific products into each market. Traders also need to be aware they must obtain FTA-specific certificates or declarations of origin for shipments to have the preferential FTA tariff apply. And those tariff-cutting benefits are worth pursuing (see Table 1).

For example, under the China–Australia Free Trade Agreement (ChAFTA), China has started progressively removing tariffs on all Australian seafood exports, to reach zero by 1 January 2019. Many tariffs on Australian seafood exports into Japan have already been eliminated, and the progressive elimination of the tariff on Southern Bluefin Tuna began on 1 April this year.

Crab exports

Queensland company Aussie Red Crab supplies sustainably caught wild Spanner Crabs, with exports making up around 30 per cent of sales. With reduced tariffs under the FTAs, in 2015-16 it sold Spanner Crabs worth $320,000 to China and $240,000 to Japan.

The business is now planning to add to its domestic fisheries quota to meet increasing overseas demand, particularly from China. Jason Simpson, co-owner of Aussie Red Crab, says profit margins increased in the 2015-16 financial year, which he attributes to ChAFTA.

Looking more broadly, trade data to these three North Asian markets show good growth for the first half of 2016 for Australian live, fresh and chilled crab exports, compared with the corresponding period last year.

Oyster equipment

It is not just seafood producers that benefit; the supply chain also wins. South Australian company SEAPA designs, manufactures, markets and supplies injection-moulded oyster baskets and aquaculture equipment for worldwide distribution. Under the Japan–Australia Economic Partnership Agreement (JAEPA), the 3.2 per cent tariff on its products has been eliminated, giving the company a competitive boost in a market where it is building a strong reputation as an expert in oyster farming technology.

Tariffs on SEAPA’s products into Korea and China have also already been eliminated, giving it a further edge over competitors. Alex Jack, from SEAPA, says the North Asia FTAs are positive. “We can look at our pricing strategies and maybe have a look at how we can market more into those countries … with the FTAs under our belt, it’s definitely going to help us.”

Table 1: Australia's North Asia FTAs- selected seafood tariff cut
Product Tariff outcome
ChAFTA – all seafood tariffs eliminated by 1 January 2019
 
Atlantic Salmon
Previous 10% tariff already cut to 6%
Fresh or chilled Abalone
Previous 14% tariff already cut to 8.4%
Fresh rock lobster
Previous 10% tariff already cut to 9%
Fresh and frozen prawns
Previous tariffs of up to 8% either eliminated already, or eliminated by 1 January 2019
Fresh and frozen oysters
Previous 14% tariff already cut to 8.4%
Fresh Spanner Crabs
Previous 14% tariff already cut to 8.4%
JAEPA – many seafood tariffs eliminated between 2015–2024
 
Abalone
Previous tariffs of up to 9.6% already eliminated
Oysters
Previous 7% tariff already eliminated
Smoked salmon
Previous 10.5% tariff already eliminated
Southern Bluefin Tuna
3.5% tariff progressively eliminated by 1 April 2024
Lobsters, shrimps and prawns
Previous tariffs of up to 9.6% already eliminated
Fresh Spanner Crabs
Previous 4% tariff already eliminated
KAFTA – seafood tariffs between 5-50% eliminated between 2016–2028  
Fresh and frozen lobster
Previous 20% tariff already eliminated
Frozen Southern Bluefin Tuna
Previous 10% tariff already eliminate
Prawns Previous tariffs of up to 20% eliminated by 1 January 2023, with many reaching zero before then
Oysters (fresh and preserved)
Previous tariffs of up to 20% eliminated by 1 January 2020
Fresh crab
Previous 20% tariff already cut to 11.4%
These and other tariff results available on the FTA Portal
 

More information

Department of Foreign Affairs and Trade free trade agreements website

FTA Hotline, 02 6261 1888

FTA Portal

Market assistance

Austrade, 132 846

Efic (Australian Government export credit agency), 1800 093 724