Australian Senate Approves China Trade Deal

Bridges, ICTSD

12 November, 2015


The Australian Senate approved on Monday 9 November the implementing legislation for the China-Australia Free Trade Agreement (ChAFTA), overcoming the last barrier in Canberra for the deal’s ratification.

The decade-long negotiations for the trade deal were concluded last November, with the agreement then signed by both sides this past June. (See Bridges Weekly, 20 November 2014 and 25 June 2015)

The two pieces of legislation passed by the Senate early this week were the Customs Amendment (China-Australia Free Trade Agreement) Bill and Customs Tariff Amendment (China-Australia Free Trade Agreement) Bill, both already approved by the House of Representatives last month.

The bills will allow goods satisfying the trade deal’s rules of origin to enter Australia at preferential rates of customs duty, along with setting out the island country’s tariff commitments under the pact.

The news comes after months of controversy around the bilateral trade agreement, particularly over whether additional labour market protections were needed for domestic workers in either the trade pact itself or in Australian law.

The two main political parties in Australia – the Liberal Party, which is in power, and the opposition Labor Party – ultimately brokered a deal in October that amended or clarified the country’s migration policies to address some of these concerns, while not changing the FTA itself. (See Bridges Weekly, 9 September 2015and 22 October 2015)

According to Australian Trade Minister Andrew Robb, those amendments agreed with Labor will soon go to the Executive Council for their sign-off.

Moving forward, the ChAFTA trade deal has “the potential to underpin Australia’s future prosperity,” said Peter Varghese, Secretary of the Department of Foreign Affairs and Trade, adding that it “is a remarkably good deal for Australia and the best deal that China has done with any partner to date.”

China is Australia’s largest export market for both goods and services, with bilateral trade hitting nearly A$160 billion in 2013-14. Varghese said competition for Chinese business will keep intensifying even with slower growth of the Chinese economy, noting the boon that an FTA with the Asian giant has already been to New Zealand.

“If we are to take full advantage of the changes underway in China, we must do all we can now to further integrate our economies and foster growth in two-way trade and investment,” he said in a speech at the Committee for Economic Development of Australia. Other Australian officials, such as Cabinet Secretary Arthur Sinodinos, say that ChAFTA is a “comprehensive agreement between two highly complementary economies.”

Among its various provisions, ChAFTA will result in the elimination or reduction of a number of tariffs, such as those on Australian beef and dairy products exported to China, along with those on Australian manufactured goods such as pharmaceuticals, as well as various energy products. China has also agreed to grant improved market access for various services sectors, with Australian officials noting that this is the best market access Beijing has ever agreed to in an FTA.

Next steps

The FTA will take effect 30 days after both countries finalise their domestic ratification processes, unless otherwise agreed. “Entry into force this year will see an immediate round of tariff cuts, followed by a second round of cuts on 1 January 2016, allowing the benefits of the agreement with China to flow quickly through to Australian exporters and consumers,” said Robb on Monday.

Robb said that along with Australia’s recent free trade agreements with China, Japan, and South Korea, which a report by The Centre for International Economics suggests could together add A$24.4 billion to Australia’s GDP between 2016 and 2035, the 12-country Trans-Pacific Partnership (TPP) – concluded just over a month ago – would also “contribute substantially” to Australia’s post-mining boom economy. (See Bridges Weekly, 8 October 2015)

ICTSD reporting Australian Senate Approves China Trade Deal


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