For more than 9 years, Australia has been negotiating with China for a free trade agreement. While details are not finalised, recently more information on ChAFTA (China-Australia Free Trade Agreement) were announced. Read on to learn the advantages Australian exporters can expect and what the estimated timeline is until ChAFTA will enter into force.
What are the effects of the China-Australia Free Trade Agreement for Australian exporters?
Once the ChAFTA commences, 85 per cent of Australian goods exported to China will be tariff free. Within four years this will rise to 93 per cent. For some of the goods this will have a major impact, since they are subject to tariffs of up to 40 per cent. When totally in force, the agreement allows for 95 per cent of Australian goods exported to China to be tariff free.
Once fully implemented the agreement will provide Australian exporters with a competitive advantage over our major agricultural competitors – the USA, Canada, EU, Chile and NZ- especially for the following goods:
- dairy products
- live animal exports
- processed foods
- hides, skims and leather
The agreement also provides major benefits to our resources, energy & manufacturing sectors with over 99.9% of duties removed on full implementation including:
- resources and energy products – e.g. non-coking coal within 2 years
- transformed resources and energy products – many on entry into force
- pharmaceuticals – duties all eliminated within 4 years
- other manufactured products including car engines, certain gems and pearls, orthopaedic appliances, aluminium plates, make-up, hair-products, centrifuges – all duties removed within 4 years
The advantages will apply in addition to those given through China and Australia being members of World Trade Organization (WTO), which includes allowances for generous shipments of rice, wheat, cotton and sugar with low tariffs.
Other products like rapeseed and vegetable-oil are still excluded from the ChAFTA but might be reconsidered as part of the built-in review process which happens three years after the beginning of the Agreement.
For further information on services and a detailed list of goods please visit the DFAT website.
What are the effects of the China-Australia Free Trade Agreement for Australian importers?
The vast majority of goods imported to Australia are expected to be duty-free, more details will be available when the official text will be released.
The timeline for the ChAFTA to be fully in place
At this point, both China and Australia have agreed on setting up the China-Australia Free Trade Agreement. These are the next steps:
- Both sides will complete a legal review and translation of the documents after the agreement will be formally signed.
- The agreement text and national Interest statement will then be tabled in Parliament for a period of 20 joint sitting days.
- The Joint Standing Committee on Treaties (JSCOT) will then conduct an inquiry into the Agreement and will report back to Parliament.
- Legislation will then be introduced to make any necessary amendments to existing legislation. Parliament will then consider these amendments.
- Relevant Regulations would also be amended in due course.
- During this time, the Chinese Government will undertake its own domestic treaty-making processes.
- After both countries have completed their processes, they will exchange diplomatic notes to certify that they are ready for the Agreement to enter into force.
- 30 days after this exchange or on a date otherwise agreed, ChAFTA will enter into force.
This process is expected take about 9-10 months with the projected start of the agreement in November or December 2015. After ChAFTA commences it will take up to 11 years until the benefits of the FTA are fully realised for all products.
After similar agreements with Korea and Japan, ChAFTA forms the third FTA with countries in North Asia. These 3 countries take 61% of Australia’s total exports.
A complete overview of all existing and currently discussed FTAs can be found on the DFAT website
To get more information on the Customs clearance of your goods or to find out which impact ChAFTA will have on your business please contact us.