China Quota For Aussie Wool Doubles In Past 7 Yrs

Peter McGauran
Minister for Agriculture, Fisheries and Forestry

China wool quota

China's demand for Australian wool has doubled in the past seven years, but the full allocation of China's tariff-rate-quota (TRQ) for wool has created uncertainty in the market and is affecting prices.

The Minister for Agriculture, Fisheries and Forestry, Peter McGauran, said today the Australian Government was taking the wool TRQ issue very seriously.

"Australia exports $1.3 billion worth of wool each year to China, the second largest export commodity after iron ore," Mr McGauran said.

"On 17 July, China advised that it would stop taking applications for the wool TRQ. It is important to remember that trade has not ceased. Many traders in China still hold unused quota and Australian growers should assess their options with their brokers, until the current situation is resolved.

"China's greasy wool TRQ has been set at 287,000 tonnes since 2004, the minimum volume under China's WTO accession commitments. Demand from China has continued to increase though as more wool processors have moved operations to China.

"We are concerned that should the quota be filled, the out-of-quota tariff rate (38 per cent, against an in-quota tariff rate of one per cent) might be applied which would greatly affect the demand for wool.

"The Minister for Trade, Warren Truss, and I have made urgent submissions to China's Minister for Trade, Mr Bo Xilai, to request cooperation from Chinese Government officials in clarifying the current situation.

"The quota affects all wool going into China, and Australian Government officials have discussed the implications with other major wool-exporting countries such as New Zealand and Uruguay.

"My Department and the Department of Foreign Affairs and Trade have secured a meeting with the Chinese Ministry of Commerce in Beijing on 10 August to discuss the wool tariff rate quota and how the current administration of the quota creates uncertainty and affects trade.

"My Department continues to work closely with industry, the Department of Foreign Affairs and Trade, and through our post in Beijing to find a solution to the uncertainty in the market this decision has created."

The Australian and Chinese wool industries have a long and successful history of cooperation which has included technical assistance and capacity building.

ENDS

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