Friday, Feb. 24, 2017

Australian exporters set to benefit from landmark trade deal signed with China

By Export Council of Australia · June 19, 2015

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The ECA welcomes the signing of the China-Australia Free Trade Agreement (ChAFTA) this week. This landmark agreement with Australia's largest trade partner secures preferential access to the Chinese market for Australian exporters.

While all trade is not equal when it comes to Free Trade Agreements (FTAs), the ECA strongly supports international agreements that serve to further liberalise trade between Australia and the rest of the world as trade is a key driver of jobs, innovation and long term prosperity. ChAFTA is no exception to this and there are a range of winners and ‘losers’. 

The biggest benefits come where there is currently the most protection, agricultural goods and services.  The winners from an agricultural perspective are exporters of beef, dairy, sheep meat and wine.  The benefits are significant with duty reductions ranging from 10% - 30% over 4-9 years.  However not all farmers are winners and the FTA does not provide any tariff relief for Australian exporters of wheat, maize, rice, vegetable oils and cane sugar.

The key services outcomes are in tourism, health, education and financial services.  The opening up of the Chinese economy to Australian service providers means that Australian business are well  placed to take advantage of opportunities presented by China's growing middle class and aging population.

The benefits for Australian importers are wide but not as significant as Australia's duty rates generally do not exceed 5%.  Duty will be removed on implementation or within 3 years for almost all qualifying Chinese exports.  This will reduce the cost of manufacturing for many of Australia's exporters.

It is important for exporters to appreciate that the FTA will not apply automatically.  Goods need to qualify as Australian originating goods and that involves meeting certain rules and producing certain documentation.  Australian exporters will need to provide their Chinese customers with either a certificate of origin issued by an authorised body or a self-prepared declaration of origin.  Unfortunately, the much easier declaration of origin can only be used if exporters first obtain a ruling from Chinese Customs that the goods meet the relevant origin rules.  This outcome creates unnecessary red tape and is not practical for those with a wide variety of exports.

The documentation requirements also highlight a key difference with the recently implemented Japan and Korea FTAs.  Under both of those FTAs an exporter prepared declaration of origin is sufficient without further Government approval.  Life would have been easier for exporters if there was more consistency on such administrative matters between FTAs.

In a perfect world Australia would also have achieved duty rates that put our farmers on level pegging with New Zealand and contained a clause ensuring we obtain the same rates offered under any FTAs entered into by China with other countries in the future.

The ECA and Hunt & Hunt Lawyers are keen to ensure Australian businesses leverage the benefits arising from ChAFTA when it enters into force, as well as the benefits presented by Australia’s existing FTAs. The ECA believes it is crucial at this time to emphasise the importance of both government and industry raising the overall awareness of the tangible and intangible benefits of FTAs, particularly ChAFTA. This includes providing practical, user-friendly information to assist individual businesses, especially services companies, utilise these agreements.

For this reason, the ECA, in conjunction with our partners ANZ and Hunt & Hunt Lawyers, have developed a website to help Australian exporters navigate the basics of Australia's FTAs quickly and easily. Companies will have the ability to search by either country/FTA or by industry. The site also provides a quick and easy reference to FTAs in general, certificates of origin, and information on doing business overseas. The FTA Tool has been developed to be complementary to the Government’s FTA dashboard.

The website will be free for everyone to access and the ECA and our partners are looking forward to sharing this platform with you when we launch the site at the end of this month. Watch this space.

About the Export Council of Australia: The Export Council of Australia is the peak Industry body for the Australian export community.  The ECA is the next exciting step in the evolution of the Australian Institute of Export (AIEx) which, for over 50 years, has had the interests of Australian exporters at heart.

About Hunt & Hunt: Hunt & Hunt is a vibrant, mid-sized law firm that provides tailored legal advice to clients across Australia and internationally. Our broad client base includes large and small businesses, government departments, major insurance firms, not-for-profit organisations and private clients.

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