The Australian Dairy Industry Council (ADIC) is warning an unbalanced Australia-European Union Free Trade Agreement (Australia-EU FTA) will irreparably damage the nation’s dairy industry, undermining farmers, processors and regional communities.
The warning comes as China has imposed provisional tariffs of up to 42.7 per cent on dairy products imported from the European Union (EU), highlighting the willingness of major economies to protect their domestic industries from subsidised imports.
ADIC Chair Ben Bennett said China’s move was a stark reminder that the EU prioritises protection of its own farmers within a highly subsidised agricultural trading system.
“Australia cannot afford to give away its domestic industries and sensitive trade areas for ink on a page and a government announcement opportunity,” Mr Bennett said.
“The Australian dairy industry, and the agricultural sector, stood behind the government walking away from an agreement with the EU in October 2023.
“We continue to believe that no deal is better than a poor deal, and this view has only strengthened as local operating conditions have continued to worsen.
“If Australian negotiators concede to the EU on critical issues such as market access, dairy tariff liberalisation and geographical indications without meaningful return, the damage to our dairy industry will be irreversible.”
The EU dairy industry has the largest offensive interest in the nation’s bilateral trade and floods the Australian domestic market with more than 71,000 tonnes of subsidised dairy product each year (valued at AU$740 million) – compared to just 1,600 tonnes that Australia exports to the EU (valued at AU$55 million).
ADIC Vice-Chair John Williams said the figures demonstrate why Australia must not weaken protections for its domestic market under an Australia-EU FTA.
“Australian dairy is world-class, but our domestic competitiveness is being eroded by increased import penetration and an uneven global playing field,” Mr Williams said.
“Opening the door wider to subsidised EU dairy without reciprocal outcomes would push more Australian-made products off supermarket shelves.”
China’s provisional duties – ranging between about 21.9 per cent and 42.7 per cent – target milk, cheese and other dairy products and reflect concerns that subsidised EU exports can harm domestic industries.
“China’s actions show that even large trading partners will defend their dairy industries when faced with unfair competition,” Mr Bennett said.
“This should be a clear signal to Australian negotiators that protecting our dairy farmers and processors must come first.”.
Mr Williams said protecting Australian dairy was about more than trade volumes.
“Every litre of Australian milk and every locally made cheese, yoghurt or butter represents regional jobs, economic value and national food security,” he said.
“Trade agreements must strengthen Australian dairy – not accelerate a shift towards imported product at the expense of local farmers and processors.”
Australia’s dairy sector has operated for decades in a highly competitive global market.
But the EU’s agricultural policies provide significant direct support to European farmers, allowing subsidised dairy products to be exported into markets like Australia – a competitive advantage Australian farmers do not receive.
“Australians want to choose Aussie dairy, but government policy must back that choice,” Mr Bennett said.
“That means standing up for Australian dairy in trade negotiations and ensuring our market is not undermined by a surge of subsidised imports.”
ADIC calls on the Federal Government to:
- Ensure any Australia-EU FTA delivers genuinely reciprocal market access for Australian dairy exports.
- Protect the Australian domestic market from a surge of subsidised EU dairy imports.
- Reject any proposals that remove safeguards without equivalent concessions for Australian dairy producers.
“We stand ready to work with government to ensure the Australian dairy sector is appropriately represented in the finalisation of any trade negotiations with the EU,” Mr Bennett said.
Photo by Katrin Leinfellner on Unsplash