China-Australia Free Trade Agreement (ChAFTA)

Australia and China signed the China Australia Free trade Agreement (ChAFTA) on June 17 2015 with it entering into force on 20 December 2015. The trade negotiations secured numerous future gains for Australian business with Australia’s largest trading partner – China. Those engaged in agriculture, manufacturing, services, investment, and resources and energy particularly benefit. China has also agreed to a special clause recognising Australia as a ‘most favoured nation’ (MFN). This provides Australian businesses access to the same deals that China strikes in free trade agreements with other nations (such as the USA) that may offer better access to the Chinese market.

 

The benefits for Australians exporting goods into China are extensive and range from removal or reduction of tariffs, larger quotas for certain restricted items and streamlined custom processes. Overall, 98 per cent of Australian goods exported to China are eligible to enter duty-free or at preferential rates. Essentially, the negotiated terms have provided Australia with a strong competitive advantage in the Chinese marketplace over some of our leading competitors such as the USA, Canada, the EU and New Zealand, particularly for our agriculture and processed food sector.

Key outcomes include:

• China providing Australia with its best ever services commitments
• Reduced labour mobility barriers and improved temporary entry access
• Duty-free entry on 96 per cent of Australia’s goods exports on full implementation of the Agreement
• Within four years of the Agreement (by 2019), almost all of Australia’s manufacturing, energy and resources exports will enter China duty free.

Benefits for Australian Service firms

China is already Australia’s largest offshore market for services. In 2018 our services exports to China were valued at AUD 17.9 billion, a 13% increase on 2017. With the signing of the China Australia Free Trade Agreement (ChAFTA), opportunities for Australian service providers were set to grow in coming years. Specific areas of opportunity in China include:

1. Improved market access for Australian banks, insurers, securities and futures companies, law firms, education services exporters, health-care providers, aged-care providers, construction firms and telecommunications businesses.

2. Increased business and skilled worker mobility. The Chinese Government is reducing barriers to Australians working in China.

3. Wholly Australian-owned companies are now allowed to establish in China. This will benefit firms in areas such as telecommunications, tourism and hotels, health and aged care, manufacturing, maritime transport, real estate, and research and development.

4. Australian architectural and urban planning firms are allowed to obtain more expansive business licences to undertake higher-value projects in China.

Want to learn more? Explore our other China information categories or download the China Country Starter Pack.