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Korean beef safeguard imminent
19 September 2019
Key points:
- Under the Korea-Australia Free Trade Agreement (KAFTA) an annual safeguard provision applies to Australian beef
- It is anticipated that the 2019 safeguard volume will be triggered in the next 3-5 weeks.
- Strong demand in Korea for Australian beef has led to the annual safeguard volume being fully utilised since KAFTA entered into force in 2014.
For 2019, once 170,673 tonnes of Australian product has cleared Korean customs, the tariff applicable to Australian beef entering Korea will rise from 24% to 30% - lasting until 31 December 2019.
This year the tariff increase for Australian product in excess of the safeguard volume has been reduced from 40% to 30%, bringing Australia in line with the US.
The US is Australia’s major competitor in the Korean imported beef market. The US tariff will remain at 18.7% due to a greater safeguard volume under the Korea-US Free Trade Agreement (KORUS).
Once Australia’s safeguard volume is reached in the coming weeks, the tariff differential between Australia and the US will increase from 5.3% to 11.3%. While the differential will create challenges for Australian beef in an already highly competitive market, this is a marked improvement on 2018, when the tariff differential was 18.7%.
Australian beef - a ‘family favourite’ for Korean consumers
While immediate demand for Australian beef may be influenced by the higher tariff and subsequent increase in cost, fundamental consumer preference for Australian beef will remain unchanged. MLA conducts an annual consumer tracker survey in Korea, which shows:
- Country of origin is very important to Korean beef buyers, as the country relies on imports for approximately 64% of its beef requirements
- Korean consumers have a strong affinity with Australian beef, associating the ‘True Aussie’ brand with trust, reliability and consistent quality.
You can read more about the Korean market in the recently updated Korea Market snapshot.
© Meat & Livestock Australia Limited, 2019
