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Korea beef safeguard trigger looming

09 November 2021
Meat & Livestock Australia

As of 4 November 2021, Australia had utilised 95.75% of its preferential beef safeguard into Korea, with just 7,546 tonnes swt remaining.

Under the Korea-Australia Free Trade Agreement (KAFTA), Australia can export 177,569 tonnes of beef to Korea in 2021 at an 18.6% duty. After the safeguard is triggered, the duty on Australian beef will jump to 30% for the rest of the calendar year.

While the safeguard has incrementally increased since KAFTA entered into force and will be entirely phased out in 2029, it has been triggered each year since the agreement’s inception.

Product shipped prior to the point of the safeguard trigger, but which has yet to clear customs, will be allowed to enter at the lower tariff rate – although the excess tonnage will be subtracted from the 2022 safeguard volume.

The safeguard was triggered on 25 November in 2020, but trade volumes may breach that threshold sooner this year – possibly within one to two weeks. Recent daily customs clearance volumes have been lumpy due to freight disruption and resurgent demand, making estimating a trigger date difficult.

Click here for the latest Australian beef safeguard usage reported by Korea Customs

While Australian beef shipments have been constrained by tight slaughter cattle supplies amid a herd rebuild, export volumes to Korea have been strong – up 3% over the year-to-October.

As a consequence of the safeguard tariff increase, Australian beef exports will be further disadvantaged compared to US product (entering under the US-Korea Free Trade Agreement) in the market, with the tariff differential increasing from 5.3% to 16.7% for the remainder of 2021.

In 2022, the tariff applicable to Australian beef exported to Korea will drop to 16.1% and the safeguard will increase to 181,120 tonnes swt (with an over-safeguard tariff rate of 30%).

TheCattleSite News Desk



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