The Agreement Establishing the ASEAN-Australia-New Zealand Free
Trade Area (AANZFTA) was signed on 27 February
2009 in Hua Hin, Thailand. The ten ASEAN members are Burma, Brunei
Darussalam, Cambodia, Indonesia, Laos, Malaysia, the Philippines,
Singapore, Thailand and Vietnam.
It is the most comprehensive free trade agreement that ASEAN has
negotiated. It is also the largest free trade agreement Australia
has negotiated. AANZFTA covers all sectors including trade in
goods, services, investment, intellectual property, electronic
commerce, competition policy and movement of natural persons. Some
of the salient features of AANZFTA are set out below.
Trade in goods and services
AANZFTA provides for the progressive reduction and/or
elimination of tariffs. AANZFTA also establishes criteria pursuant
to which goods which "originate" in Australia, New
Zealand or an ASEAN member country will qualify for preferential
AANZFTA contains a broad, non-exhaustive,
"asset-based" definition of "Investment"
covering every kind of asset owned or controlled by an investor
including shares, property and business concessions conferred by
law or contract. AANZFTA imposes obligations on the parties which
enhance legal protection and certainty in relation to investment.
These obligations include requirements to:
apply fair and equitable treatment and full protection and
security to investments;
ensure non-discriminatory treatment in relation to measures for
investors that have suffered losses due to armed conflict, civil
strife or states of emergency;
allow funds of an investor relating to an investment to be
transferred freely and without delay, subject to specified
ensure that any expropriation or nationalisation of an
investment is only for a public purpose, applied in a
non-discriminatory manner, is in accordance with due process of law
and is accompanied by prompt, adequate and effective
Movement of natural persons
The ability to enter and stay temporarily in another country to
explore business opportunities, negotiate and enter into contracts
and transact business is very important to economic integration.
AANZFTA imposes obligations on the parties to make commitments on
temporary movement of service suppliers, investors and goods
sellers and other persons engaged in regional trade and investment.
The parties to AANZFTA are required to publish information on
temporary entry requirements, process applications promptly, and
notify applicants, on request, about the status or outcome of the
application. Any fees imposed in relation to the processing of
immigration formalities are required to be reasonable and in
accordance with domestic law.
New opportunities in the region
AANZFTA offers a plethora of new opportunities for businesses
located in the region. Improved market access and greater
transparency and certainty is commercially significant for those
companies currently doing business, or who wish to take advantage
of new opportunities, in the region. It is also particularly
significant in those markets where Australia does not have a
bilateral FTA (such as Indonesia, Philippines and Vietnam).
AANZFTA also has the potential to generate broader benefits than
a series of bilateral FTAs by creating opportunities for Australian
products to exploit regional supply chains.
Relevantly, in the area of construction services, Indonesia and
Malaysia have committed to allowing joint ventures with foreign
equity of 55 and 49 percent respectively. Brunei has committed to
allow foreign equity in construction firms of 50 percent. Laos has
committed to allowing 100 percent foreign owned firms to operation
in its construction sector.
It is expected that AANZFTA will enter into force in the second
half of 2009 and no later than 1 January 2010. The Parties have
agreed to conduct a general review of AANZFTA in 2016.
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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