What does the Australia-China Free Trade Agreement Contain?

The Australia China Free Trade Agreement contain the main text and four annexes. Apart from the Introduction, the main text section contains 17 chapters which are Initial Provisions and Definitions, Trade in Goods, Rules of Origin and Implementation Procedures; Customs procedures and trade facilitation; Sanitary and Phytosanitary Measures, Technical Barriers to Trade; Trade Remedies; Trade in Services; Investment; Movement of Natural Persons; Intellectual Property; Electronic Commerce; Transparency; Institutional Provisions, Dispute Settlement, General Provisions and Exceptions, Final Provisions. Apart from the main text and the annexes, the China Australia Free Trade Agreement also contains two memorandums between the two countries regarding the facilitation of investment and visas for holiday makers. There is also an official document regarding the provision of traditional Chinese medicine services. These three documents were signed at the same time as the China Australia Free Trade Agreement.

When the China Australia Free Trade Agreement was officially signed?

On 17 June 2015, the Minister of the Chinese Department of Commerce and the Minister of the Australian Commerce and Investment signed officially the China Australia Free Trade Agreement in Canberra, Australia. The President of the People’s Republic of China, Xi Jin Ping and the Prime Minister of Australia Tony Abbot sent their mutual congratulations on the same day of the official signing of the agreement.

When the China Australia Free Trade Agreement begin to take effect?

After the official signing of the China Australia Free Trade Agreement, the two countries had been implementing the domestic approval procedures. Upon completion of the approval procedures, the two countries would discuss the specific timeframes to enable the agreement to take effect as soon as possible.

How was the process of the free trade negotiations between the China and Australia over the last decade?

From April 2005 until November 2014, the leaders of the two countries announced the completion of the trade negotiations. The China Australian Free Trade Agreement negotiations include as many as 21 rounds of meetings and dozens of small-scale discussions. In October 2003, China and Australia signed the China-Australia Trade and Economic Framework, and the two countries had decided to engage in joint studies of the feasibility of developing free trade zones. In March 2005, the joint studies completed which confirmed the feasibility of China Australia free trade zones and that the free trade zones would in general bring practical benefits to both countries. As a result, the free trade negotiations officially began in April 2005. Between May 2005 and July 2013, the two countries held nineteen rounds of negotiations which despite the major achievements made, did not make any break-through with some difficult issues. In April 2014, President Xi Jin Ping and Prime Minister Li Ke Qiang met individually with the visiting Australian Prime Minister Tony Abbot. The leaders of the two countries reached important consensus on the importance of accelerating the negotiations in order to establish the free trade agreement. The negotiations thus made important progresses. In the following months, the delegates of the two countries continuing intensified negotiations which the twentieth and twenty-first rounds of negations. The ministers of commerce and trade of the two countries came to an agreement in order to practically push forward the negotiations. The negotiations accelerated and the discrepancies between both parties gradually narrowed. Between October and November 2014, the bilateral delegates finalised the last stage of negotiations after round-the-clock work over more than twenty days. On 17 November, President Xi Jin Pin made a state visit to Australia and held meetings with the Australian Prime Minister Tony Abbot and the two leaders jointly announced the completion of the negotiations around the free trade agreement.

What has been completed between the completion of the free trade negotiations and the final signing of the agreement?

On 17 November 2014, during the state visit by President Xi Jin Pin to Australia, he confirmed with Prime Minister Tony Abbot and they announced the successful completion of China Australia free trade negotiations. The bilateral delegates ascertained the outcomes of the negotiations and carried out the legal verification of the agreement text. On 5 February 2015, the review and verification of the negotiation outcomes was completed and the bilateral delegates signed the draft of the negotiation outcomes. In June, the review of the Chinese English bilingual legal materials was completed. The two countries also completed the domestic procedures to facilitate the official signing of the China Australia Free Trade Agreement. All the preparatory work ahead of the final agreement signing had thus completed.

What is the significance of signing the China Australia Free Trade Agreement?

The China Australia Free Trade has important significance having achieved the aim of overall, high-quality, and mutual benefits. The China Australia Free Trade Agreement has advanced the commerce and trade relationship between the two countries. It facilitated the flow of capital, resources and people, pushing the development of the economies of the two countries towards a mutually beneficial direction. Producers and consumers in both countries have benefited greatly from the China Australia Free Trade Agreement. According to the prediction of the Australian Research Centre of International Economy, the China Australia Free Trade Agreement will raise the Australian GDP by 0.7 per cent, and the Chinese GDP by 0.1 per cent, respectively. As major economies in the Asia Pacific region and globally, the signing of the China Australia Free Trade Agreement will make important preparations for the development of the Asia Pacific free trade zones agreed at the 22nd informal meeting among the leaders of the Asia Pacific Economic Cooperation Organisation. The China Australia Agreement has played a positive role in facilitating the economic integration of the Asia Pacific region.

What are the main characteristics of the China Australia Free Trade Agreement?

The China Australia Free Trade Agreement was the first FTA signed between China and a major developed economy. It was also one of the FTAs of the highest overall level of free trade investment that China has ever signed with any other countries. Australia was the first country which has undertaken commitments to China with regard to trade in services through a negative listing approach. The arrangement of facilitation to trade was the first of its kind from a developed country to projects and technical staff under Chinese investment programmes. Australia was the world’s second country which has made commitments with regard to holiday maker visa arrangement through the free trade agreement. Australia is also the country which has approved the most applications for entry into Australia in this category.

Why China and Australia signed the Free Trade Agreement?

Australia is a major investment and trade partner to China. Australia is ranked as the top twelfth country in the world in terms of the GDP. It is also a member of the OECD and G20. Australia has a mature market economy supported by a well-established legal and administrative model. As a country, Australia has import influence in the Asia-Pacific region and globally. Presently, China is Australia’s leading trade partner, and its the largest importing and exporting country. Australia is also the second largest destination of China’s overseas investment after Hong Kong. There is important complementarity between the two countries in the collaboration of natural resources mining, agriculture and industrial production. The signing of the China Australia Free Trade Agreement will further advance the trade and investment relationship between the two countries in order to achieve mutual benefits.

What kind of impact the China and Australia Free Trade Agreement will have on the economic and trade relationships between the two countries?

The signing of the free trade agreement will significantly lower the barriers of bilateral trade and investment, creating opportunities for the two countries to develop future economic and trade arrangements which are more open, facilitating and better regulated. The free trade agreement will enable the two countries to explore the potential of collaboration, further facilitating the movement of capitals, resource and people in and out of both countries. Overall, the free trade agreement will deepen and broaden the bilateral economic and trade relationships, improve and elevate current levels of cooperation, sustaining the development of overall strategic partnership between these two countries.

What is the role of the China Australia free trade agreement for the economic integration of the Asia Pacific region?

The 22nd informal meeting of the leaders of APEC decided to advance the progress towards creating the Asia Pacific free trade zone. China and Australia are major countries in the Asia Pacific region. The signing of the China Australia free trade agreement will make useful preparations for the creation of the Asia Pacific free trade zone, facilitating the economic integration f the Asia Pacific region, enabling the deepened cooperation among economies and the development of our region as a whole.

What are the differences between the China Australia Free Trade Agreement and the free trade agreements signed between Australia and Japan, and Australia and South Korea?

In comparison with the two free trade agreements signed with Japan and South Korea, Australia has prioritised the free trade of goods and services with China. This is mainly shown in the maximum five-year period of tariff reduction for China, and the maximum eight-year period of tariff reduction for Japan and South Korea. The portions of Chinese goods with a three-year tariff reduction period imposed by the Australian government are much higher than similar products from Japan and South Korea which have the same tariff reduction timeframe. Similarly, the maximum tariff reduction period stipulated by the Chinese government for Australian products are shorter than the maximum tariff reduction periods from Japan and South Korea. The maximum tariff reduction period from China for Australian products is fifteen years, whereas Japan and South Korea have imposed a maximum tariff reduction periods for Australian goods of sixteen years and twenty years, respectively. Moreover, China adopts a simple and straightforward approach to tariff reduction, i.e. linear tariff reduction. By contrast, Japan utilises both linear and postponed tariff reduction; and South Korea adopts more complex tariff reduction methods such as partial and seasonal tariff reduction.

What are the major breakthroughs in the China and Australia Free Trade Agreement regarding the bilateral trade in services?

The China Australia Free Trade Agreement is the first high-level free trade agreement between China and a major developed economy. The two negotiating countries have achieved substantial progress. The level of free trade in services offered by Australia to China is higher than the recently signed Japan – Australia Free Trade Agreement and the South Korea – Australia Free Trade Agreement. There are three major breakthroughs in the free trade of services between Australia and China:

Firstly, Australia is the first country in the world which has committed to free trade with China by adopting the negative list approach. Based on the commitments made to the World Trade Organisation (WTO) upon the confirmation of its membership, China has committed to partial free trade in services to Australia, by using the positive list approach.

Second, major breakthroughs have been achieved in terms of the exchange of personnel and staff. Australia has agreed to establish mechanisms to facilitate investment. This includes the creation of a ‘green channel’ to expediate the approval of applications for working visa and work permits submitted by specialists and technicians working on projects funded by Chinese investments. This purposely established facilitating mechanism by the Australian government for China is the first of its kind. Australia will provide five thousand work holiday visas for Chinese young people intending to visit Australia.

This is to promote the cultural exchange between young people in both countries. Australia also provides 1800 entry permits to specialist workers such as doctors of traditional Chinese medicine, Chinese language teachers, Chinese cooks and martial arts trainers. Third, the China Australia Free Trade Agreement has made important preparations for further collaboration in the free trade of services between the two countries. Both countries have agreed to carry out further negotiations of free trade in services using the negative list method. This is to achieve higher levels of cooperation.