ChAFTA will strengthen export momentum and give Australian exports an advantage over major competitors from the US, Canada and the EU. It also puts Australia on an equal footing with competitors from countries like New Zealand and Chile, which have already negotiated trade deals with China. The deal — known as Chafta — eliminated tariffs on Australian barley and sorghum when it entered into force in December 2015, while cutting tariffs on Australian seafood, sheepmeat and horticulture. Milk and beef are expected to be phased out in the 2020s. “I don`t think we should abandon it,” she said. “It`s a whole series of products that go to China, and we wouldn`t want to put that at risk, even though many of them are clearly part of China`s trade movements right now.” It understood that it could be years before it was completed and that it had heard concerns from some exporters that such a measure could “make matters worse” in the wider trade dispute. “But on the other hand, how much worse can it be?” More recently, tariffs of up to 200% have been applied to Australian wine, citing allegations of illegal trade practices disputed by Australia. Others, which successfully guarantee free trade agreements with China, have benefited from a sharp increase in trade flows. For example, Chinese imports from New Zealand have increased by more than 450% since the entry into force of the China-New Zealand Free Trade Agreement in October 2008.
China`s total imports increased by only 50% over the same period (Chart 6). Apart from this, Australia and China also signed a Memorandum of Understanding this week to set up official renminbi clearing (RMB) agreements in Australia. This will make it easier for Australian exporters to carry out RMB`s cross-border transactions, with the potential to reduce the cost of these transactions by 2-3% by reducing the need for hedging against forex risks. These measures are an additional asset to Australia`s export competitiveness. Trade Minister Simon Birmingham said the government would continue to provide “all possible support we can provide at the administrative, diplomatic and political levels to ensure that our exporters retain the kind of market access they should have to China.” In his strongest comments to date, Trade Minister Simon Birmingham said China had “targeted” a dozen Australian goods amid tensions between the countries. But a free trade agreement with China will also strengthen Australia`s competitiveness without exporting resources and promote export diversification. As was generally expected, ChAFTA has notably gained better access to China`s emerging agriculture and services markets. This should help Australia revive growth towards non-resource resources – a significant economic padding when the mining boom ends.
Dr. Jeffrey Wilson, a research director at the Perth USAsia Center, said the free trade agreement reached by the Abbott government in 2015 “is not worth the paper it`s written on today,” given the steps Beijing is taking. The two nations signed a free trade agreement in 2015 that reduced tariffs and improved access to dozens of goods. Existing tariffs on Australian beef imports into China range from 12% to 25% and our modelling is based on a complete elimination of tariffs within a decade. There is also an existing customs duty of 10% on live cattle. However, according to the Department of Foreign Affairs and Trade, many of Australia`s live cattle imports into China are purebred and this type of live cattle imports does not currently incur any tariffs. .