On 17 November 2014, the Australian Government entered into a Declaration of Intent with the Chinese Government in relation to a “free trade agreement”. The Declaration of Intent marks the conclusion of the China-Australia Free Trade Agreement negotiations and lays the foundation for a watershed economic relationship between the two countries.
Changes under the China-Australia Free Trade Agreement
The Government has released a statement saying that the China-Australia Free Trade Agreement covers 14 commercial agreements. The agreements cover a variety of areas including:
- agriculture and processed food;
- resources, energy and manufacturing;
- a variety of service areas some of which include legal services, financial services, education services and construction and engineering services;
- business and skilled worker mobility;
- investment; and
- work and holiday arrangement.
At the commencement of the China-Australia Free Trade Agreement, 85% of Australian products will be exported to China tariff free. This is set to rise to 93% within four years.
The biggest immediate beneficiaries will be the mining sector and the agriculture and processed food sector.
Mining Sector Changes
In respect of the mining sector the Australian Government has secured the removal of tariffs on:
- all resources and energy products (some of these will be effective immediately, with others occurring over a two year period);
- transformed resources and energy products (largely effective upon commencement);
- up to 10% on pharmaceuticals (including vitamins and health products); and
- other manufactured products (including car engines, plastic products, make up and pearls), within four years.
Agriculture and Processed Foods
In respect of the agriculture and processed food sector, some of the removal of tariffs the Australian Government has secured include:
- dairy products within four to eleven years;
- wine over four years;
- barley, effective upon commencement of the FTA;
- live animal exports within four years;
- seafood over four years; and
- processed foods.
What happens next?
The signing of the agreements will take place once both countries have completed legal review and translation.
Once the agreements have been signed, they will be presented to the Australian Parliament, along with a National Interest Analysis for 20 joint sitting days.
Following this, the Joint Standing Committee on Treaties will conduct an inquiry into the agreements and report back to Parliament.
Once legislation has been drafted and China has undertaken its own domestic processes, Australia and China will exchange diplomatic notices. 30 days after this exchange, or on a date otherwise agreed, the China-Australia Free Trade Agreement will enter into force.
For more information on the China-Australia FTA see the website for the Department of Foreign Affairs and Trade.
Please contact me if you have any queries.