Most Read Contributor in Australia, September 2016
After a decade of negotiations, President Xi Jinping and Prime
Minister Tony Abbott have concluded negotiations for a historical
free trade agreement (FTA) between China and
Australia, with the Australian agriculture, and in particular the
dairy sector, set to benefit strongly.
Trade and Investment Minister Andrew Robb and Chinese Commerce
Minister Gao Hucheng signed a Declaration of Intent in respect of
the FTA yesterday, undertaking to prepare the legal texts in both
languages for official signing in 2015.
This article provides a summary of the provisions of the FTA
that will be of particular application or importance to the
Australian dairy industry. You can read about the FTA more
here, and about its impact on the financial services sector
Federal Trade Minister Andrew Robb has described the FTA as
"the dairy deal"; an acknowledgement of the fact that the
Australian dairy sector, which is worth about $13 billion per annum
to the national economy, is at the core of the agreement, which
will outline a deal which most regard as a superior outcome to that
secured by New Zealand in its 2008 free trade agreement with
"This is better for Australian agriculture," Prime
Minister Abbott said, "it's at least as good for our
agriculture as New Zealand got about six or seven years ago - and
their dairy exports to China have gone up from under half a billion
to over three billion."
The 10% to 20% tariffs currently applied across the dairy sector
will be phased out over the next decade, with the 15% tariff on
infant formula to be phased out over four years.
Importantly, most Australian dairy products will not be
subjected to the protective safeguards which currently apply to New
Zealand dairy exports to China. The New Zealand safeguards provide
that once a quota is reached, tariffs once again apply. The only
Australian dairy product that the safeguards will apply to is whole
Parliamentary Secretary to the Prime Minister, Josh Frydenberg,
previously said the FTA will be worth up to $18 billion to the
Australian economy over the next few years and "up to 95 per
cent of our exports over time will enter the Chinese market tariff
free". As trade has blossomed between Australia and China, the
Government now believes $18 billion is a conservative estimate.
A summary of the phasing out of tariffs under the FTA is set out
Current exports to China
Skins, hides and leather
Up to 14%
2 - 7 years
12% - 25%
Sheep and goat meat
10% - 20%
4 - 11 years
14% - 30%
Horticulture (including fruit, vegetables and nuts)
Seafood (including abalone, rock lobsters, prawns, scallops and
removal of all remaining tariffs on minerals commodities
(including zinc, nickel, copper and uranium)
It is important to note that, while the FTA generally provides
Chinese investors with greater access to Australian assets and
projects (whereby private Chinese investors will have the standard
foreign investment review threshold increased from $248 million to
$1.087 billion, in line with Australia's free trade agreements
with New Zealand, Japan, Korea and the United States), agricultural
land over $15 million will face foreign investment review scrutiny,
as will agribusinesses over $53 million and all investment
proposals by state owned enterprises.
This publication does not deal with every important topic or
change in law and is not intended to be relied upon as a substitute
for legal or other advice that may be relevant to the reader's
specific circumstances. If you have found this publication of
interest and would like to know more or wish to obtain legal advice
relevant to your circumstances please contact one of the named
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The TPP could have a significant positive impact on the investment and financial services of Australia and Singapore.
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