China’s growing middle class has long been a golden goose for agricultural exports.

Key points:

  • Trade pundits say oil-rich Arab nations are a lucrative export opportunity
  • Some exports are already being diverted away from China and to the Middle East
  • Leaders of the Gulf states have reiterated interest in a free trade deal

But, as political and trade relationships with China deteriorate, exporters and trade pundits say the opulent and oil-rich bazaars of the Middle East could be Australia’s next golden opportunity.

The federal government is scrambling to strike new trade deals, the most recent of which is with the United Kingdom.

Simon Harrison from Australia Gulf States Group says the Middle East has a burgeoning middle class and should be the next trade target.

“We’ve been paddling like ducks under the surface to get the Middle East profile over and get people to understand it,” he said.

At a summit in January, the leaders of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates renewed interest in a free trade agreement with Australia.

A close-up of a heavy set, grey bearded man in glasses standing in front of a tree with yellow blooms

Australia Gulf States Group’s Simon Harrison says Australia has ignored opportunities in the region.(

ABC Rural: Jon Daly

)

Neglected relationship

The Gulf states have a collective GDP of $US1.6 trillion and command some of the world’s biggest sovereign wealth funds.

Mr Harrison said the trade relationship with those wealthy Arab nations had long been neglected, but an increasingly shaky relationship with China could change things.

“The first port of call for me and many others will be the Gulf states.”

A group of people sunning themselves on a beach, with a row of skyscrapers in the background

The Gulf states are looking to refocus on service sectors such as tourism, which will need premium food supplies.(

Reuters: Christopher Pike

)

Mr Harrison said there was also rising interest and appetite for investment from those lucrative sovereign wealth funds.

“The conversations we’ve been having, even during this COVID period, have been about, ‘How can we get engaged with Australia? What do we need to do? Where are the entry points?'” he said.

Commodity to premium market

Australian barley is the most recent and prominent example of an export finding a new home in the Gulf States of the Middle East.

After China imposed a crippling 80 per cent tariff on barley, Australian exporters turned to the Kingdom of Saudi Arabia, as Grain Growers chair Brett Hosking explained.

Getting back into that market, reintroducing ourselves to old friends and being able to expand that market and grow it, has been really important and has made a huge difference to our growers,” Mr Hosking said.

Mr Hosking said Saudi Arabia was a “commodity” market for feed barley, and growers needed to pursue niche opportunities for malt barley in other places, such as Mexico.

Generally speaking, the Arab states have thus far been commodity price markets for Australian agricultural exports.

Mr Harrison said, however, the demand for premium products was increasing.

A group of robed Arab men stand in front of a giant mural of a sandy landscape

Leaders of the Gulf Cooperation Council recently reiterated support for a free trade deal with Australia.(

Sourced: Gulf Cooperation Council

)

Saudi Arabia’s economy was shifting away from a reliance on oil production and increasingly focusing on service sectors, such as tourism, Mr Harrison said.

“They’re building out of their tourist sector,” he said.

“It’s all there to play for.”

Free trade negotiations

In 2019–20, Australia’s exports to the Gulf states were worth $6.5 billion and the highest value commodities were meat and wheat, according to Department of Foreign Affairs and Trade (DFAT) figures.

With no free trade deal in place, there are still barriers between Australian exporters and those wealthy Arab economies.

The managing director of Queensland-based exporter of organic beef OBE Organic, Dalene Wray, says those barriers need to be addressed with a free trade agreement.

A woman with short, red hair addresses a room full of people from a podium. She is wearing a beige jacket

OBE Beef managing director Dalene Wray says the Federal Government should prioritise a trade deal with the Gulf states.(

ABC Rural: Kallee Buchanan

)

“[Let’s] pat ourselves on the back for the work we’ve done in the UK, but let’s look forward to the other markets around the world [such as] the Middle East and other markets in South East Asia,” she said.

“Let’s continue to negotiate the best trading conditions for exporters.”

Australia has been negotiating a free trade deal agreement with the Gulf Cooperation Council (GCC) since 2007.

The GCC is an intergovernmental and economic union between Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

Ms Wray said a trade deal with the GCC would be a boon for agricultural exports.

At its most recent leaders summit, the GCC renewed its interests in a free trade agreement with Australia, and DFAT said internal consultations had begun.

Exporters look beyond China to the oil-rich bazaars of the Middle East
Source:
Source 1

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