What The Australia-China FTA Means For Small Businesses

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Agriculture, services and tourism are expected to be the big beneficiaries of the free trade agreement between Australia and China.

The new deal, which has been 10 years in the making, will pave the way for easier trade between the two countries. Now that a declaration of intent has been signed, both countries will now take steps to bring the agreement into force during 2015.

Agriculture will fares the best in the new FTA, with tariffs on dairy products, wine and beef to be reduced in the next four to 11 years. Other sectors to benefit include processed food, tourism and travel services, manufacturing, construction and engineering, architecture and urban planning and employment services.

University of New South Wales economics professor Tim Harcourt toldSmartCompany SMEs will benefit the most from the deal. Harcourt said there were already about 5600 Australian SMEs doing business directly with China, another 4800 trading with China through Hong Kong and another 3000 who have a physical presence in China.

Australia’s export credit agency, Efic, has lauded the deal.

“The landmark China-Australia free trade agreement will assist Australia to broaden its export performance and provide new opportunities to SME exporters, by delivering unprecedented access to China’s burgeoning agricultural and services markets,” the government agency says.

It says the nation’s exports to China have expanded by an average 25% per year over the past decade, making it by far our most important export market. But until now, the surge in exports to China has been heavily dominated by resources.

Here’s the Department of Foreign Affairs and Trade’s snapshot of how the proposed changes will help Australian industries once the FTA is implemented during 2015:

Agriculture and Processed Food

• Removal of all tariffs on our dairy products, which can be as high as 20% (to be enacted within four to 11 years).
• Removal of tariffs of 12 to 25% on beef (over nine years).
• Removal of tariffs on live animal exports of 10% (within four years).
• Removal of tariffs on sheep meat of 12 to 23% (over eight years).
• Removal of tariffs of 14 to 20% on wine (over four years).
• Removal of tariffs on all horticulture products, ranging up to 30% (mostly within four years).
• Immediate elimination (post implementation) of the 3% tariff on barley.
• An Australia-only duty-free quota for wool in addition to continued access to China’s WTO wool quota.
• The removal of tariffs on seafood, including of 15 and 14% respectively on rock lobster and abalone, over four years.
• The removal of tariffs across a range of processed foods including fruit juice and honey.

Tourism and Travel-related Services

China has guaranteed that Australian service suppliers will be able to construct, renovate and operate wholly Australian-owned hotels and restaurants in China.

Australian travel agencies/tour operators will also be able to establish wholly Australian-owned subsidiaries in China for tours within China for both domestic and foreign travelers.

Construction and Engineering Services

China will provide new market access to Australian companies undertaking joint construction projects with Chinese counterparts in Shanghai. Australian companies will be exempted from business scope restrictions, allowing them to undertake a wider range of commercially-meaningful projects.

Manufacturing Services

China has made its first ever FTA commitment on manufacturing services, guaranteeing access for wholly Australian-owned companies to provide contract manufacturing services covering a wide range of manufactured products.

Architecture and Urban Planning Services

In the best offer China has made to a FTA partner, China will take into account Australian experience in assessing applications for higher-level qualifications, allowing Australian architectural and urban planning firms to obtain more expansive business licenses to undertake higher-value projects in China.

Other Services Sectors

Australian providers will benefit from new Chinese commitments allowing them to offer a range of services, including through subsidiaries based in China that can be wholly Australian-owned, in the following sectors: software implementation, research and development, services incidental to manufacturing, building cleaning, printing of packaging materials, translation and interpretation services, real estate, and environmental services.

Business and Skilled Worker Mobility

The FTA will support increased trade and investment between the two countries by reducing barriers to labour mobility and improving temporary entry access within the context of each country’s existing immigration and employment frameworks and safeguards. It will provide improved access for a range of Australian and Chinese skilled service providers, investors and business visitors, supporting investment and providing business with greater certainty.

Innovative new Investment Facilitation Arrangements (IFAs), which will operate within the framework of Australia’s existing visa system, will also provide greater flexibilities for companies to respond to unique economic and labour market challenges.

IFAs will be available for large infrastructure projects above $150 million, strengthening investment in this key area and leading to the creation of jobs and increased economic prosperity for all Australians.

Source: https://thesbhub.com.au/run-a-business/Business-in-Asia/The-Australia-China-FTA.html#.VkPpy1UrKUk