Australian wool exports to China would be boosted by 20 percent in volume terms by a free trade agreement between the two countries, leading industry body Australian Wool Innovation said on Monday.
If China were to abolish tariffs on wool imports from Australia it could potentially trigger a 10 percent increase in Australian wool production and raise farm income by up to 7 percent, AWI said.
Australia and China began talks on a free trade pact in May this year. Two-way trade between the two countries totals almost A$30 billion ($23 billion) a year, with wool one of the biggest Australian exports to China.
Presently, a duty of 38 percent kicks in on Australian wool exports to China above an allowable quota of 288,000 tonnes in 2004. Total imports in that year amounted to 265,000 and were covered by a tariff of only 1 percent.
In addition, wool tops - a partly processed often lower quality wool - attracted a 3 percent duty on a quota of up to 80,000 tonnes in 2004, with anything above that hit with a 38 percent tariff. Imports in that year amounted to 24,129 tonnes.
"China's wool textile industry is expanding and demand for wool is forecast to almost double over the next five years," Brian van Rooyen, deputy chairman of AWI, the Australian wool industry's main marketing and research body, said.
AWI's sister company The Woolmark Company has estimated that China's demand for wool apparel could rise to 473 million kilograms clean, or around 62 percent of global wool apparel demand, in 2010.
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