News International Sugar Journal

Trans-Pacific Partnership – “Bittersweet” deal for Australian sugar

The United States gave few concessions on sugar in the Trans-Pacific Partnership (TPP) agreement reached by trade ministers of 12 nations on 5th October in Atlanta, USA.

Under the TPP, Australia will get an additional 65,000 tonnes base allocation for sugar into the US. That’s on top of the 87,402 tonnes of sugar allotted to Australia under the tariff rate quota for the marketing year that started on Oct 1.

However, the agreed quota is well short of the 500,000 to 700,000 tonnes the sector hoped for.

Under the terms of the deal Australia could send some 400,000 tonnes of sugar to the United States every year by 2019 in the best case scenario, whereby it will also get 23 percent of the discretionary quota, which is based on U.S. demand under the TRQ (tariff rate quota). That’s up from 8 percent now.

While not disputing that, informed source in the Australian sugar industry says that figure would be the best case scenario, rather than the most likely scenario.

Australian negotiators say the Trans-Pacific Partnership offer on sugar is the best the US has made under any trade agreement since the North America Free Trade Agreement.

But the Australian sugar industry has again been left disappointed, saying US market protections have now survived a bilateral free trade with Australia, and the multilateral TPP.

The Australian Sugar Industry Alliance describes the finalisation of the TPP as “bittersweet”, saying it is disappointed that “the US sugar lobby was successful in blocking all but a small amount of additional market access for Australian sugar”.

Canegrowers chairman Paul Schembri said “In today’s market, that extra access [of 65,000 tonnes] translates to approximately AU$13 million per year benefit for the Australian sugar industry. We’ve got a toe-hold, but I have to say it falls well short of what our ambition was, which was an economic uplift of over AU$100 million”.

The Australian sugar industry has praised Japan for reducing levy on high polarity sugar . Chief executive of the Australian Sugar Milling Council Dominic Nolan, who represented the Australian Sugar Industry Alliance in Atlanta, said that the TPP will provide “access to Japan above and beyond the Japan-Australia Economic Partnership Agreement.”

“[That] will result in commercially meaningful reduction of costs of AU$25 per tonne for Australian sugar going into that market,” he said.

For Australia, the TPP deal also included elimination of the tariff on refined sugar into Canada; elimination of tariffs on raw sugar into Peru; wholesale licensing arrangements for supply of refined sugar to the food and beverage industries in Malaysia will be liberalised.