Australia: Free Trade Agreement With ASEAN Countries Announced

Last Updated: 5 September 2008
Article by Andrew Hudson

Late yesterday (28 August 2008), the Australian Minister for Trade announced that Australia and New Zealand had concluded negotiations for a free trade agreement with the ASEAN nations (to be known as the AANZFTA).

The full text of the AANZFTA has yet to be released. However, according to press releases from the Minister for Trade, the following highlights have been announced:

  • The parties to the AANZFTA comprise the 10 ASEAN members (Burma, Brunei, Darussalam, Cambodia, Indonesia, Laos, Malaysia, The Philippines, Singapore, Thailand and Vietnam) together with Australia and New Zealand.
  • The AANZFTA will include trade in goods and services together with investment, intellectual property, competition policy and economic co-operation which reportedly makes it the most comprehensive FTA which ASEAN has negotiated. In relation to economic co-operation, the AANZFTA refers to a work program to be carried out over 5 years with an estimated cost of $20-$25 million.
  • The AANZFTA takes into account different levels of development of ASEAN members. It does this by providing for different timeframes for implementing certain FTA commitments. For these purposes, Australia and New Zealand will typically have the shortest implementation timeframes and the 3 least developed countries (Burma, Cambodia and Laos) the longest.
  • In relation to goods, the AANZFTA provides for:
  • high levels of tariff elimination;
  • tariffs to be eliminated on between 93% and 96% of tariff lines in key ASEAN markets;
  • high levels of tariff elimination in some countries but lower levels of tariff elimination in the newer ASEAN member countries (being Vietnam and the 3 least developed countries);
  • general tariff elimination to apply to approximately 95% to 97% of Australia's current trade with ASEAN;
  • with limited exemptions, existing tariffs will be capped and subject to reductions in most cases leading to elimination;
  • many low tariffs will be eliminated as early as 2010 and 2011;
  • high tariffs will be subject to significant cuts early in the transition period and then gradually reduced or eliminated.
  • Commitments in terms of services reportedly go beyond the ASEAN WTO round offers including commitments in engineering services (Malaysia and The Philippines), legal services (Vietnam), accounting (Malaysia and The Philippines), architecture (Brunei and The Philippines), education services (Malaysia, The Philippines and Vietnam), financial services (Indonesia) and construction services (Indonesia and The Philippines). There are also some significant improvements in temporary entry commitments in some markets. There will be the usual provision for the parties to work together towards mutual recognition for professional qualifications and licensing.
  • The AANZFTA establishes a new regime for investment protections and includes an investor – state dispute resolution mechanism.
  • In terms of intellectual property (reportedly for the first time in an external ASEAN FTA) it includes substantive and "best endeavours" commitments to copyright, trade marks and transparency as well as establishing a framework for further commitments on intellectual property issues.
  • The AANZFTA establishes a basis for competition-related co-operation (including exchanges of information) and a basis to facilitate trade through e-commerce in the region.
  • The material does not provide any details of the mechanism for seeking the benefits for preferential trade in goods. No details have been provided in relation to the rules of origin which will apply or whether there will be a requirement for certificates of origin and, if so, what form they will take. Presumably, details will be provided in the near future together with other information sessions to those in industry.
  • The AANZFTA will have no impact on Australia's existing FTA with New Zealand, Singapore and Thailand.

Clearly, these are only the very early stages of information being released regarding AANZFTA. There will now be significant work by both government and the private sector to work on the detail and ensure that all parties take full benefit at the commencement of the AANZFTA. We will be working with our Interlaw partners in ASEAN countries and those in related services industries (including customs brokers and freight forwarders) to ensure that those affected are aware of the terms of the AANZFTA at the earliest opportunity and take full benefit of those advantages which have been provided. We will also be working with government agencies to assist in the sharing of information regarding the AANZFTA. Clearly, the terms of the AANZFTA will form a significant focus in presentations and other sessions later in the year including the proposed round of CBFCA member forums in October and November 2008.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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