After nearly a decade and 21 rounds of intense negotiations, Australian Prime Minister Tony Abbott and Chinese President Xi Jinping shook hands this week on a comprehensive free trade agreement. The ChAFTA allows 85% of Australia`s merchandise exports to enter China duty-free after they come into force, which rises to 93% in four years and 95% if fully implemented. While many of the details are not yet complete (official documents will be signed in 2015), the government estimates that the deal will generate economic benefits of $18 billion (1.1% of GDP) over a decade. Trade Minister Simon Birmingham said the government would continue to provide “all possible support we can provide at the administrative, diplomatic and political levels to ensure that our exporters retain the kind of market access they should have to China.” Australia`s relations with China have deteriorated this year following several trade strikes that have rocked the fish, timber, raw materials and agriculture industries. Senator Birmingham said the continuing series of disruptions was “deeply worrying”. CUTA Secretary Sally McManus questioned whether Chafta had lived up to its initial hype and called for parts of the deal to be renegotiated. But there is still considerable room for expansion. ChAFTA will exploit export opportunities by removing import tariffs on a number of Australian agricultural products in the coming years. In particular, tariffs of up to 20% on dairy products will be eliminated within four to 11 years. Australian beef producers will benefit from the removal of tariffs of between 12 and 25% over nine years. Tariffs on sheepmeat, which can reach 23%, will be gradually lowered over a period of eight years. Restrictive tariffs on Australian wine, horticulture and seafood will most often fall to zero within four years.
In an interview with Guardian Australia, the opposition leader set out some markers of how Australia should deal with escalating tensions with its main trading partner and found that while diversification into other markets is important, it cannot happen overnight. ChAFTA offers considerable benefits for Australia`s energy resources and exports. Once effective, 93% of Australia`s current resource, energy and industrial exports will enter China duty-free and reach 99.9% if fully implemented. It is important that the recently introduced 3% coal coking tariff is immediately abolished and that the 6% tariff for thermal coal expires within two years. Apart from that, Australia and China also signed a Memorandum of Understanding this week to establish official renminbi clearing (RMB) agreements in Australia. . . .