The contaminated berry scandal has forced Australians to
focus on the quality of imported foods. An interesting and
unexpected response has been the suggestion that the recently
concluded free trade agreement with China is part of the problem.
Given the FTA has not been signed, let alone implemented, the
comments were misinformed. However, the FTA is likely to be
implemented some time this year and it is worth considering what is
true and false about the claims it will have on food
FALSE – There will be a flood of cheap Chinese food
FTAs generally act to reduce duty and make imports cheaper.
However, they cannot make imports cheaper if the non-FTA duty rate
is already zero. Much of Australia's food imports, including
fresh or frozen berries, are already duty free. Even where not duty
free, the 5% duty saving under an FTA is unlikely to significantly
alter purchasing decisions.
FALSE – The FTA limits Australia's ability to impose
safety measures on imported food
Both the World Trade Organisation and the free trade agreements
Australia enters into allows Australia to take measures to prevent
health risks associated with imports. The only proviso is that such
measures must be genuine, apply equally to locally produced goods
and not be a veiled attempt to protect local manufacturers.
Australia is already accused of breaching these rules by the
manner in which it seeks to prevent importations of meat
potentially affected by mad cow disease. However, such claims have
not lead to a relaxation of Australia's requirements.
TRUE – Logistics improvements mean we are importing more
It is hard to believe that Australia is looking to China for
berries. Clearly Australia has the environmental advantage when it
comes to growing such fruit. However, a berry has to be picked and
someone has to be paid to pick them. The evolution of containerised
transport, including refrigerated containers, means that transport
cost is not a significant factor when considering from where to
source a good. It's the same logistics improvements that mean
that Australia can export fresh milk to China.
TRUE – Under the FTA more attention will be placed on the
country of origin
Lower duty rates under free trade agreements are based on where
the goods are produced or manufactured. It is generally irrelevant
where the goods are packaged or exported from. It is likely that to
claim preferential duty rates under the FTA the Chinese exporter
will need to produce a document certifying that the goods were
grown/produced in China. Australian importers claiming this
preference will be held liable by Australian Customs for the
accuracy of the claim. While this will not improve consumer focused
labelling, it will place greater pressures on importers to ensure
origin claims are correct.
TRUE – The buck stops with the Australian supplier
The reality is that only the smallest sample of imported food
will be tested by Government. The real driver of consumer
protection will be the fact that the Australian
importer/distributor is legislatively liable for breaching food
safety standards. Prevention is better than the cure, and more
reliable than detection. It is hoped that the contaminated berry
scandal will motivate Australian food importers to insist on strict
standards and periodically undertake the onsite due diligence to
ensure those standards are being met.
TRUE – The FTA will actually increase the consumption of
The FTA will mean that the cost of Australian food exported to
China significantly decreases. This will have the result that a
greater number of Chinese consumers will have access to Australian
produced food. It may also have the effect that over time, to
compete with high quality imports, Chinese food producers will have
to increase domestic confidence in their own product. The only way
to do this will be to lift food safety standards.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Where a non-signatory is involved in performing a contract, it may still be bound by the arbitration agreement.
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