Australia: China becomes Australia’s most open country: snapshot of the FTA


China is Australia's number one trading partner, with two-way flow of goods and services exceeding $150 billion last year. Australia and China came to a Free Trade Agreement (FTA) this week, which will ensure that 85% of all Australian exports will enter China tariff-free, such figure rising to 93% within four years, and to 95% when the FTA is in full force in the next decade. Australia is expected to benefit from the FTA to the amount of $18 billion over the next 10 years.

The FTA is an ambitious and bold document. However, Australian businesses will need to position themselves to look at and understand how the details of the FTA will be applied in practice. Notwithstanding this, the importance of the FTA is less in its detailed provisions and more in the signal that it sends that both China and Australia are prepared to break down barriers for business. China will become, in terms of tariff barriers, the most open market that Australia exports to. Australia, for its part, has stepped back from its negative approach to Chinese investment. It has raised the thresholds for private investors so that they are the same as those that apply to the US, and has relaxed restrictions upon senior Chinese workers. Invariably a key area that will disappoint will be around the liberalisation of services.

It is unlikely that Australia will be given a "leg up" over other countries as many commentators seem to imagine. Many of the concessions in the FTA around services are those that are already available to other foreign investors. Those that are not will probably be toned back so that they are consistent with the current liberalisation, or further liberalisations will be pushed through by China over the next year. Notwithstanding this, the fact remains that this is the most far reaching free trade agreement that China has signed with any country. Of itself, the signing of the FTA should signal a new era of engagement between Australia and China. Further, Australia has secured from China a "most favoured nation" status, which means that any future trade concessions granted by China to other countries will also be granted to Australia, but this will not apply to commodities that are not covered by the FTA (see below for a list of commodities that are not covered).

Snapshot of the FTA

We set out below the key takeaway points in relation to each of the key industry sectors affected by the FTA.



All tariffs on dairy products are removed within 4 to 11 years.

Tariff on infant milk formula is reduced from 15% to 0% over 4 years.

Tariff on liquid milk is reduced from 15% to 0% over 9 years.

Tariffs on ice cream, lactose, casein and milk albumins are reduced from 10-19% to 0% over 4 years.

Tariffs on cheese, butter and yogurt are reduced from 10-15% to 0% over 9 years.

Tariff on milk powders is reduced over 11 years.

NRF Takeaway
The benefits for the Australian dairy sector are expected to reflect the increased dairy exports for New Zealand after their FTA with China.

In line with New Zealand but without the quotas.


Tariffs on beef are reduced from 12-25% to 0% over 9 years.

Tariff on beef offal is reduced from 12% to 0% over 4 to 7 years.

NRF Takeaway
Beef exports to China are currently worth AU$722 million.  Although the reduced tariff is important to our beef industry, the test will be in its implementation.  China has a large domestic beef industry that it wants to protect (although herds have been depleted) and as a result we assume that in China non-tariff barriers will replace tariff barriers. In addition, Australian beef is almost double the cost of Chinese beef.  As a result query whether there will be a significant increase in imports resulting from the FTA.

Sheep and goat meat exports to China are currently worth AU385 million.

Live cattle exports to China are currently worth AU$136 million.

Exports to China of skins, hides and leather are currently worth AU$896 million.

Taken together, the changes to these industries are expected to boost the sector by AU$11 billion.

Sheep and goat meat

Tariffs on sheep meat and goat meat are reduced from 12-23% to 0% over 8 years.

Tariff on frozen sheep offal is reduced from 18% to 0% over 7 years.

Live animal exports

Tariff on live cattle is reduced from 10% to 0% over 4 years.

More generally, all tariffs on live animal exports to be reduced from 10% to 0% over 4 years.

Skins, hides and leather

Tariff on sheep skins is reduced from 7% to 0% over 4 years.

Tariffs on cow hides and skins are reduced from 5-8.4% to 0% over 2 to 7 years.

Tariffs on kangaroo hides and skins are reduced from 14% to 0% over 4 years.

Tariffs on other leather products are reduced from 5-14% over 4 years.

Barley and sorghum

Tariff on barley is reduced from 3% to 0% immediately.

Tariff on sorghum is reduced from 2% to 0% immediately.

NRF Takeaway
Barley and sorghum exports to China are currently worth almost AU$500 million, and this change is expected to give a real boost to this industry.


All tariffs reduced from up to 30% to 0% within 4 years.

Tariffs on macadamia nuts, almonds, walnuts, pistachios and all other nuts are reduced from 10-25% over 4 years. 

Tariffs on various fruits are reduced from 10-30% over 4 years.

Tariffs on all fresh vegetables are reduced from 10-13% over 4 years.

NRF Takeaway
The change is expected to give a real boost to this industry.


All tariffs, including tariffs of 15% and 10-14% respectively on rock lobster and abalone are reduced to 0% over 4 years

NRF Takeaway
The change is expected to give a real boost to this industry.

Wine exports

Tariffs on wine are reduced from 14-20% to 0% within 4 years

NRF Takeaway
Wine exports to China are currently worth $217 million, and the change is expected to give a boost to this local industry.


An Australia-only duty free quota for wool, in addition to continued access to China's WTO wool quota.

The duty free quota will grow by 5% each year to 2024.



Resources and energy products

Immediate removal of 3% coking coal (i.e. metallurgical coal for steel making) tariff.

Thermal/steam coal tariff is reduced from 6% to 0% within 2 years.

Tariffs on non-coking coal are reduced from 6% to 0% over 2 years.

NRF Takeaway
In relation to the resources and energy sector as a whole, upon full implementation of the FTA, almost all of Australia's current resources and energy exports will benefit from duty-free entry into China.  The FTA will provide greater certainty for Australian exporters by locking in zero tariffs on major exports such as gold, crude petroleum oils and liquefied natural gas.  This will cement the mining and energy sector relationship that is the cornerstone of trade between China and Australia.

Transformed resources and energy products

Tariffs removed on minerals commodities (many immediately), including refined copper and alloys (unwrought) (currently 1-2%), aluminium oxide (alumina) (currently 8%), nickel mattes and oxides (currently 3%), unwrought zinc (currently 3%), copper waste and scrap (currently 1.5%), unwrought aluminium (currently 5-7%), aluminium waste and scrap (currently 1.5%), unwrought nickel (currently 3%), other mineral substances (currently 3-5%) and titanium dioxide (currently 6.5-10%).

Manufacturing Exports

Processed foods

Removal of all tariffs across a range of processed foods, including fruit juice and honey.

NRF Takeaway
The manufacturing sector as a whole, upon full implementation of the FTA, will receive a real boost as almost all of Australia's manufactured products exported to China will benefit from duty-free entry into China.


Tariffs on pharmaceutical products are reduced from 3-10% to 0% either immediately or within 4 years, including vitamins and health products.

Other manufactured products

Tariffs are removed on various manufactured products within 4 years, including car engines (currently 10%), plastic products (6.5-14%), diamonds and other precious stones (currently 3-8%), orthopaedic appliances (currently 4%), aluminium plates and sheets (currently 6-10%), make-up and hair products (currently 6.5-15%), centrifuges (currently 10%) and pearls (currently 21%).

Financial Services


Australian financial service providers will be given unprecedented access to the Chinese market and will be able to do business in China more easily.  This will provide a significant boost to Australia's financial services exports.

Some specific examples of the changes to the financial services sector include the following:

  • Australian fund managers will be able to invest on behalf of Chinese institutions, and Australian insurers will be able to write Chinese third-party motor vehicle insurance contracts.  This is in fact already open to foreign investors.
  • Prior to the FTA, banks had to work in foreign currency for 3 years and make profits in China for 2 years before being allowed to work in Renminbi.  The waiting period for local currency business will now be cut to 1 year.
  • Australian banks will be able to enter futures markets for the first time through joint ventures that can be 49% Australian-owned, where such foreign ownership was previously banned.  Private equity firms will also have the opportunity to do business in China.  This is in fact already open to foreign investors.
  • Australian fund managers will be able to provide advice and services to Chinese institutional investors who can invest outside China.
  • Australian insurance providers will be given access to China's third-party liability motor vehicle insurance market.  This is in fact already open to foreign investors.

NRF Takeaway 
These concessions to the Australian financial services sector are significant in that it should give Australia access to China's financial markets.  Some of the concessions in the FTA already exist, whereas some are new and not already available.

In particular, these concessions will provide opportunities for the Australian funds management industry.

Combined with the Renminbi Qualified Institutional Investor scheme, the FTA delivers a new level of access to the Chinese market for Australian funds managers.

Worker Mobility


The FTA will reduce barriers to labour mobility between the Australian and Chinese labour markets, and will improve temporary access within the framework of each country's existing immigration and employment safeguards.

Chinese companies will be permitted to bring management level individuals (i.e. skilled service providers, investors and business visitors) to Australia.

Further, new Investment Facilitation Arrangements, which will operate within the framework of Australia's existing visa system and which will be available to large infrastructure projects worth more than $150 million, will provide more flexibility for companies to respond to economic and labour market challenges

NRF Takeaway
These changes are important for their symbolism and are not as extensive as was agreed between China and the USA.

The current procedures for Chinese workers to enter Australia are extremely convoluted to the point where projects are often delayed because project terms often prevent foreign workers from entering the Australian labour market. These changes will mainly apply to senior management individuals who are currently not able to get into Australia.

It is expected that these changes will strengthen investment in large infrastructure projects, leading to the creation of new jobs and increased economic activity in Australia.



China will permit Australian maritime transport service suppliers to establish wholly Australian-owned ship management enterprises in the Shanghai Free Trade Zone (SFTZ).

NRF Takeaway
These concessions are generally already available to foreign investors.


Australian law firms will be able to establish commercial associations with Chinese law firms in the SFTZ.

Within such commercial associations, foreign lawyers qualified in foreign countries will be able to practice relevant foreign countries' law international law; Chinese qualified lawyers will be able to practice Chinese law and international law without suspension of their Chinese practicing certificates.

NRF Takeaway
This will allow for the provision of international legal services without restrictions on the geographic location of clients. We will need to see the detail to understand whether this expands upon what is already open to foreign law firms in the SFTZ.


Within 1 year, China will list on an official Ministry of Education website all Australian private higher education institutions registered on the Commonwealth Register of Institutions and Courses for Overseas Students.

NRF Takeaway
This will add 77 institutions to the existing 105 Australian institutions on the website.

Chinese students currently make up 29% of Australia's international student market, contributing AU$4 billion into the Australian economy. This will add 77 institutions to the existing 105 Australian institutions on the website, providing a trusted source of information to potential Chinese students.


China will guarantee new access for Australian companies investing in value-added telecommunications services in the SFTZ with improved foreign equity limits.

NRF Takeaway
This will enable wholly Australian-owned companies to supply domestic multi-party communication services, application store services, store and forward services and call-center services to the Chinese market.

We need to see the detail on this concession to understand whether it is a new concession.  However, based on the information provided, it would appear to be an important concession for Australian companies.


Tourism operators will be able to construct, renovate and operate wholly Australian-owned hotels and restaurants in China, and Australian travel agencies and tour operators will be able to establish wholly-owned subsidiaries in China.

NRF Takeaway
These changes are important for their symbolism.

The construction and operation of high-ranking hotels fall with the restricted sector of the current version of Catalogue for the Guidance of Foreign Investment Industries.


Health care operators will now be able to establish wholly Australian-owned hospitals and aged care institutions in China.

NRF Takeaway
This should be a significant relaxation for the construction and operation of hospitals.  Currently, foreign investors are only permitted to establish hospitals in seven cities.  This should allow Australian investors to move beyond those seven cities.

It is less significant for the construction and operation of aged care institutions.

This should greatly expand the Australian private health sector's ability to provide healthcare services throughout China.  However, the thought is that China may be slow in implementing the domestic regulations necessary to implement the concession.


Wholly Australian-owned companies will be able to provide contract manufacturing services in China covering a range of manufactured products.

NRF Takeaway
This is a unique concession, as it marks China's first ever free trade commitment to manufacturing.

Chinese Investment into Australia

Foreign investment in Australia

Threshold for screening by the Foreign Investment Review Board (FIRB) increased from AU$248 million to AU$1.078 billion for private Chinese companies buying in Australia in non-sensitive sectors.

For agricultural land, FIRB scrutiny threshold lowered to AU$15 million for farm land, and AU$53 million for buying an Australian agribusiness.

The Australian government has retained the ability to screen Chinese investments at lower thresholds for sensitive sectors, such as media, telecommunications and defence-related industries.

FIRB will continue to screen all investments by Chinese State-Owned Enterprises

NRF Takeaway
It is expected that, due to the increase in the FIRB threshold, bilateral investment between China and Australia will increase considerably.  The Chinese government estimates an increase in outbound investment of $1.44 trillion over the next 10 years.

However, on the new lower thresholds for agriculture, uncertainty will exist as to the effect of the changes and on properly understanding the differences between farm land and agribusiness.
These changes are important for their symbolism.  China has viewed FIRB as discriminating against Chinese companies. Accordingly, this change is important for China. And the result of this change means that Australia should be more attractive for Chinese investors than Canada and the US, but still behind the UK.

However, the changes do not apply to Chinese State-Owned Enterprises (i.e. government enterprises).


China and Australia have agreed to review bilateral taxation arrangements, including relief from double-taxation.

NRF Takeaway
This will greatly benefit parties doing business between China and Australia.

Industries that miss out

Australian rice, sugar, wheat, oil seeds and cotton industries will miss out on benefits at this time, so if China agrees anything with the USA or Europe in respect of these industries, Australia will be at a disadvantage. However, the FTA is subject to review in 3 years. There will be no changes to Australia's risk-based quarantine measures as a result of the FTA.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.