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Australia's seafood exports to China spike under new FTA

Australian rock lobster and abalone are the biggest species to have benefited from the trade deal -- but more growth opportunities are on the horizon, a new report suggests.

Overall Australian seafood exports continued to grow in recent years -- jumping from AUD 1 billion (€638.8 million/$722.7 million) in 2013 to AUD 1.4 billion (€894.4 million/$1 billion) in 2017.

The biggest driver for this growth comes from China, which forms the "dominant component" of the increase, according to a new report titled "The Chinese seafood market: Opportunities and challenges for Australian exporters."

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And things continue to look bright, as further opportunities arise with full implementation of zero tariffs under the China-Australia Free Trade Agreement (ChAFTA) by Jan. 1, 2019, Michael Fabinyi, author of the study at the University of Technology Sydney, suggested.

Direct trade to China has been increasing since 2013, and in particularly over the last year, when exports jumped fourfold in value from AUD 85 million (€54.3 million/$61.4 million) to AUD 358 million (€228.7 million/$258.7 million).

By contrast, exports to Vietnam and Hong Kong -- which serve as trade hubs for China -- have both declined in the same period AUD 155 million (€99 million/$112 million) and AUD 61 million (€39 million/$44.1 million), respectively.

Fabinyi said it is "very likely that exports that were going to China through Vietnam and Hong Kong in previous years are now being traded directly to China."

In the context of ChAFTA, "this is a trend that is likely to continue," he wrote.

'Strong reputation'

According to Fabinyi, Australian seafood enjoys "an extremely strong reputation" in China, and in particular Australian rock lobster and abalone.

Originally focused on exporting lobster tails to North America, since the late 1980s Australian producers have shifted to the Chinese market and rapidly expanded the industry.

Rock lobster is now by far Australia’s largest seafood export by value, worth AUD 693 million (€442.7 million/$500.8 million) in 2015-2016.

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Another product sold heavily in the Chinese market is abalone, Australia’s second-highest seafood product by value, with AUD 182 million (€116.3 million/$131.5 million) exported in 2015-2016.

Other species with a significant market in China include salmon, sea cucumbers, live coral trout, crab, and shrimp.

But despite the strong reputation, "significant challenges" exist also for Australian exporters, Fabinyi suggested.

The anti-corruption crackdown has impacted demand for the most highly-priced seafood products, including Australian rock lobster. Lower-priced lobster from North America has been winning ground "dramatically," as a consequence.

Increased production from aquaculture is also competing with Australian wild capture fisheries, for example farmed abalone from China.

According to the report, Australia's exporters will need to "proactively respond" to these challenges in order to reap greater benefits from this market.

"However, despite these challenges, Australian seafood in China is clearly doing well, and this has been given a boost with the development of ChAFTA," Fabinyi said.

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