China and Australia signed a free trade agreement on Wednesday after a decade ofnegotiations, covering areas including a simplified review procedure for investments, most-favored-nation status and easier market access to service sector.
Under the agreement, 85.4 percent of goods traded between both sides will cut tariffs to zeroimmediately. About 97 percent of Australian exports to China will be tariff free following thedesigned timeline step by step. There will include many agricultural products such as beef,dairy and wine. Australia will eventually reduce tariffs to zero on all goods imported fromChina.
China’s major exports to Australia are machinery, telecommunication equipment, computer,furniture and garment product, and its main import from Australia are iron ore, coal, gold,copper, education-related travel services and agricultural products, according to the Customsdata.
Official figures show trade volumes between China and Australia jumped from $88.1 billion in2010 to $136.9 billion in 2014. Australia had $9.4 billion trade surplus with China last year.
Australia’s service businesses, such as education, tourism, telecommunications, healthcareand financial services, will gain more market access into China, either by partnering up withChinese companies, or in certain situations being able to access those markets directly.
Private Chinese investment under $830,000 will not be subject to the approval of Australia’sForeign Investment Review Board. There also will be an Investor State Dispute Settlementmechanism under the agreement.
China was Australia’s largest export market for both goods and services in 2014, accountingfor nearly a third of total exports, and a growing source of foreign investment.
Eager to seek more new market growth points with close trade partners together, China alsosigned its largest bilateral free trade agreement in terms of volume with South Korea earlierthis month.
Under the deal, China will remove tariffs on 91 percent of all products from South Koreawithin the next 20 years, while Seoul will eliminate tariffs on 92 percent of all goods in theother direction.
FTA signals new era in trade ties
The China-Australia Free Trade Agreement (FTA), agreed upon by President Xi Jinping andAustralian Prime Minister Tony Abbott last November, is set to start a new era in trade tiesbetween the two countries.
Under the FTA, Australia will eventually reduce tariffs to zero on all goods imported fromChina, and China will remove tariffs on the vast majority of Australian goods. It will alsoinclude opening-up of numerous service sectors, a simplified review procedure forinvestments, most-favored-nation treatment, favorable market access rules and markettransparency.
Chinadaily