Commodity Fact Sheet
What’s the Outcome for Vegetables?
On February 8, 2004, the United States and Australia concluded negotiations on a Free Trade Agreement (FTA), and on February 13, 2004, President Bush notified Congress of the intent of the United States to enter into an FTA with Australia. The FTA contains commitments on most agricultural products, and addresses other trade measures between the two countries as well.
The current situation . . .Australia generally applies low tariffs on agricultural products, and for certain products, such as dried potatoes and potato flakes, applies a tariff of 5 percent instead of the 29 percent permitted under the rules of the World Trade Organization (WTO). While most U.S. vegetables enter duty-free, Australia applies a 5 percent tariff on a number of vegetable products, including mushrooms, potatoes (fresh, dried and flakes), sweet corn (frozen and canned), canned olives and spinach. From 2001 through 2003, U.S. suppliers annually shipped on average $21.5 million worth of vegetable and vegetable products to Australia, and the U.S. share of its import markets was 13 percent.
With the agreement . . .Australia immediately eliminates all duties on U.S. vegetable exports. This will be particularly beneficial to U.S. exporters of processed and canned vegetables. From 2000 through 2003, annual U.S. processed and canned vegetable exports to Australia averaged $5.9 million, accounting for 6 percent of Australia’s total processed and canned vegetable import market. With the elimination of the 5 percent import duty, U.S. shippers will enjoy total duty-free access into Australia for this market segment.
Australia’s commitment to immediately eliminate duties on all U.S. vegetables will also benefit U.S. exporters of frozen vegetables. From 2001 through 2003, annual U.S. frozen vegetable exports to Australia averaged $630,000, accounting for 17 percent of Australia’s total frozen vegetable import market. With the elimination of the 5 percent import duty, U.S. shippers will enjoy total duty-free access into Australia for this rapidly growing market segment.
United States Commitments
The current situation . . .Vegetables from Australia face U.S. import tariffs with ad valorem equivalents as high as 30 percent, although the vast majority were subject to import tariffs of less than 4 percent. From 2001 through 2003, average U.S. vegetable imports from Australia totaled $1.8 million, accounting for less than 1 percent of the value of U.S. vegetable imports from all countries.
With the agreement . . .Australia stands to immediately gain or maintain duty-free access for about 50 percent of all fresh and processed vegetable and vegetable products in Chapters 7 and 20 of the HTSUS. U.S. import tariffs on 20 percent of all fresh and processed vegetable and vegetable products are phased out over 4 years, import tariffs on another 15 percent of these products will be phased out over 10 years, and import tariffs on the most sensitive 4-6 percent will be phased out over 18 years.
The United States may impose an agricultural safeguard measure on certain horticultural products if import prices drop below a pre-determined level. These products include dried onion and garlic, processed tomatoes, tomato sauces and canned asparagus. The safeguard measure will be in place over the entire 18-year tariff phase-out period.
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