The Australian-China Free Trade Agreement: What it means for your Business:

On the 17 June 2015 Australia signed a Free Trade Agreement with China after nearly 10 years of negotiation. The deal is expected to open up billions of dollars in new markets for Australian exporters. Details emerging show that the agreement could free up more than 90 per cent of Australian exports from tariffs over the next four years.

So what does this mean for Australia and your business? The department of Foreign Affairs and Trade outlined the following about the China-Australian Free Trade Agreement ChAFTA.

In agriculture and food, the Australian Government has secured:

• The removal of all tariffs on our dairy products (which can be as high as 20 per cent) within four to 11 years.
• The removal of tariffs of 12 to 25 percent on beef over nine years.
• The removal of tariffs on live animal exports of 10 per cent within four years.
• The removal of tariffs on sheepmeat of 12 to 23 per cent over eight years.
• The removal of tariffs of 14 to 20 per cent on wine over four years.
• The removal of tariffs on all horticulture products, ranging up to 30 per cent, most within four years.
• The immediate elimination of the three per cent tariff on barley.
• An Australia-only duty free quota for wool in addition to continued access to China’s WTO wool quota.
• The removal of tariffs on seafood, including of 15 and 14 per cent respectively on rock lobster and abalone, over four years.
• The removal of tariffs across a range of processed foods including fruit juice and honey.
• The removal of tariffs of 5 to 14 per cent on hides, skins and leather over two to seven years.

• The removal of tariffs on all resources and energy products: including on coking coal (metallurgical coal for steel making) (currently subject to a 3 per cent tariff) on the first day of the Agreement, and non-coking coal (thermal/steam coal for power generation) (6 per cent) within two years.
• The removal of tariffs on transformed resources and energy products, such as refined copper and alloys (unwrought) (currently subject to 1 and 2 per cent tariffs), aluminium oxide (alumina) (8 per cent), nickel mattes and oxides (3 per cent), unwrought zinc (3 per cent), copper waste and scrap (1.5 per cent), unwrought aluminium (5 and 7 per cent tariffs), aluminium waste and scrap (1.5 per cent), unwrought nickel (3 per cent), other mineral substances (3 and 5 per cent tariffs), and titanium dioxide (6.5 and 10 per cent tariffs) – many upon the Agreement entering into force.
• The removal of tariffs of up to 10 per cent on pharmaceuticals, including vitamins and health products, either on entry into force or phased out over four years.
• The removal of tariffs within four years for other manufactured products, including car engines (currently subject to a 10 per cent tariff), plastic products (6.5 to 14 per cent), diamonds and other precious stones (3 and 8 per cent tariffs), orthopaedic appliances (4 per cent), aluminium plates and sheets (6 and 10 per cent), make-up and hair products (6.5 to 15 per cent), centrifuges (10 per cent) and pearls (21 per cent).
• ChAFTA provides greater certainty for Australian exporters by locking-in zero tariffs on major exports such as iron ore, gold, crude petroleum oils, and liquefied natural gas (LNG).

• Australian law firms will be able to establish commercial associations with Chinese law firms in the Shanghai Free Trade Zone (SFTZ). This will allow them to offer Australian, Chinese and international legal services through a commercial presence, without restrictions on the location of clients.

• China has committed to deliver new or improved market access to Australian financial services providers in the banking, insurance, funds management, securities, and securitization and futures sectors.
• A future work program will deliver on-going market access in the financial services sector as China pushes ahead with economic reform and liberalisation.
• In addition, China and Australia signed, on 17 November, a Memorandum of Understanding designating an official RMB clearing bank in Sydney, allowing overseas trading of China’s currency in Australia for the first time, improving the efficiency of cross-border RMB transactions.

• Within one year of commencement, China will list on an official Ministry of Education website all Australian private higher education institutions registered on the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS).
• This will add 77 institutions to the existing 105 Australian institutions on the website providing an important and trusted source of information to potential Chinese students who today make up 29 per cent of our international student market, injecting $4 billion to the Australian economy.

• Facilitate student and teacher exchanges between both countries.
• Increase marketing and recruitment opportunities for Australian education providers in China.

• In best-ever FTA commitments, China will allow Australian service suppliers to provide technical consulting and field services in coal bed methane and shale gas extraction.
• China has also guaranteed access for consulting services related to exploiting oil and gas resources, as well as iron, copper and manganese resources in cooperation with Chinese partners.
• In the best offer China has made to a FTA partner, China will take into account Australian experience in assessing applications for higher-level qualifications, allowing Australian architectural and urban planning firms to obtain more expansive business licences to undertake higher-value projects in China.

• ChAFTA will support increased trade and investment between the two countries by reducing barriers to labour mobility and improving temporary entry access within the context of each country’s existing immigration and employment frameworks and safeguards.
• ChAFTA will provide improved access for a range of Australian and Chinese skilled service providers, investors and business visitors, supporting investment and providing business with greater certainty. Innovative new Investment Facilitation Arrangements (IFAs), which will operate within the framework of Australia’s existing visa system, will also provide greater flexibilities for companies to respond to unique economic and labour market challenges. IFAs will be available for large infrastructure projects above $150 million, strengthening investment in this key area and leading to the creation of jobs and increased economic prosperity for all Australians.