Free trade agreements (FTA)
Australia’s trade policy seeks to maximise trade benefits for all Australians by securing market gains through multilateral, regional, and bilateral approaches. FTAs with individual countries or regional groupings are an important part of this strategy.
Australia has concluded FTAs with New Zealand (ANZCERTA – effective 1 January 1983), Singapore (SAFTA – effective 28 July 2003), the United States(AUSFTA – effective 1 January 2005), Thailand (TAFTA – effective 1 January 2005), Chile (Australia-Chile FTA – effective 6 March 2009) and the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA – entry into force is expected early 2010) . FTA negotiations are underway with China, the Gulf Cooperation Council (GCC), Japan, Korea and Malaysia.
In November 2008 the Government announced that it would participate in negotiations for a Trans-Pacific Partnership Agreement (TPP). The TPP will expand on the current Trans-Pacific Strategic Economic Partnership Agreement between Brunei Darussalam, Chile, New Zealand and Singapore (which entered into force in 2006) to also include .the United States of America and Peru.
The Government announced on 18 August 2009 that Australia would commence negotiations on a new regional trade and economic integration agreement with the Pacific Forum. Known as the PACER Plus negotiations, these will involve Australia, the Cook Islands, the Federated States of Micronesia, Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, the Republic of the Marshall Islands, Samoa, the Solomon Islands, Tonga, Tuvalu and Vanuatu. Australia's primary objective with PACER Plus is a more sustainable and prosperous Pacific.
Australia agreed to undertake feasibility studies into the merits of separate FTAs with both Indonesia and India. The joint feasibility study with Indonesia was presented to Trade Minister Crean and his Indonesian counterpart, Minister Pangestu, in February 2009. The study is currently being considered by the Australian and Indonesian Governments. On India, an officials-level Joint Study Group (JSG) is expected to complete its joint study in 2009.
- What are FTAs?
- Why have FTAs?
- Current FTAs
- Australia's FTA Agenda
- DAFF’s role in FTAs
- Benefits of the FTAs
Australia’s FTAs are ‘living agreements’ that continue to develop and evolve long after signing. For more information on completed Free Trade Agreements, including contact details for further information and advice, visit the Australian Government Online Guide to Australia’s FTAs
What are FTAs?
FTAs are international agreements between two or more countries to eliminate tariffs on substantially all trade between them. Modern FTAs generally go beyond eliminating tariffs to include commitments on services, Customs cooperation, intellectual property, foreign investment, and possibly other issues that will assist trade.
Eliminating restrictions between FTA partners leads to greater integration of economies and mutual benefits, including more export opportunities and product choices in the importing country.
The Australian Government will enter into an FTA only if it believes the agreement:
- will deliver significant economic benefits to Australians
- is consistent with WTO rules
- will result in substantial trade liberalisation in goods, services and investment, and
- is in line with Australia’s broader interests with the other party or parties.
Comprehensive FTAs should deliver benefits either faster or beyond what can be achieved through the WTO.
Why have FTAs?
The Australian Government considers FTAs as an integral part of international trade policy.
FTAs increase Australia’s trade and investment opportunities, and are particularly beneficial when they seek to remove barriers in highly protected markets or gain a foothold in potential or expanding markets.
By facilitating access to these markets, FTAs provide significant commercial benefits to Australia’s exporters and in turn, wider economic benefits to all Australians.
Helping our exporters is especially important. One in five Australian jobs – or one in four jobs in regional Australia – is directly or indirectly connected to exports, which provide a quarter of Australia’s regional income.
Furthermore, a large proportion of Australian resource-based products are exported, including:
- 65 per cent of farm products
- 75 per cent of fish products
- 60 per cent of forest products.
The export opportunities and associated benefits that FTAs provide are therefore very important for Australia. Australian consumers also benefit from FTAs by having a wider range of products to choose from, and from lower prices.
FTAs can help improve the competitiveness of Australian industry through access to lower priced inputs and by encouraging producers to be more efficient to remain competitive against imports.
FTAs can be negotiated and implemented faster than other trade arrangements.
They can contain animal, plant and food health and safety (sanitary and phytosanitary, or SPS) provisions, but Australia’s approach is that these provisions should not provide new obligations in this area, or weaken the integrity of our SPS systems.
Australia will not negotiate on specific SPS measures or on trade-offs between market access and the application or lowering of SPS measures and standards. The objective of SPS provisions in FTAs is to build cooperation and consultative arrangements on animal, plant and food health and safety matters.
Current FTAs
Australia has FTAs with ASEAN (AANZFTA - to commence January 2010). Chile (entered into force March 2009), the United States (January 2005), Thailand(January 2005), Singapore(July 2003) and New Zealand (January 1983), and is negotiating agreements with China, the GCC, Japan, Korea and Malaysia.
AANZFTA is the most comprehensive FTA ASEAN has concluded and covers goods, services, investment, intellectual property, e-commerce, temporary movement of business people, and economic cooperation. It binds ASEAN tariffs and contains substantial tariff elimination commitments and WTO-plus commitments in other areas, which will strengthen Australia’s commercial ties with the region, Its commitments will expand and deepen over time in line with development of the ASEAN Economic Community. AANZFTA will bind current low tariffs, and deliver, over time, tariff elimination from the more developed ASEAN member countries and Vietnam on between 90 and 100 per cent of tariff lines covering 96 per cent of current Australian exports to the region.
The Australia-Chile FTA eliminated 92 per cent of Chile’s tariff lines, covering 97 per cent of goods currently traded. This includes Australian coal, meat, wine and key dairy exports and all other industrial goods of interest to Australia.
Under our existing FTAs, Australian exporters enjoy duty-free access on all products into New Zealand and Singapore. Similar duty-free access is being phased in for Thailand.
Under our FTA with the United States, Australian exporters will eventually enjoy duty-free access on 97 per cent of tariff lines and improved tariff quota access for some dairy products exempt from tariff elimination. Sugar is the only product on which improved access has not been achieved under this agreement.
Australia is seeking similar high-quality FTAs with other key trading partners. The negotiations are working to identify market access problems, eliminate tariffs, and address other access restrictions such as import licensing.
DAFF’s role in FTAs
DFAT leads and coordinates FTA negotiations on behalf of the Australian Government.
DAFF works with DFAT to ensure the interests of agricultural industries are taken into account in the development of Australian negotiating positions.
DAFF is involved in all FTA negotiations and processes, and in developing strategies to maximise FTA gains.
DAFF and DFAT work together to consult industry on identifying market access priorities and defensive interests, and to keep industry informed of the government’s approach to the negotiations.
FTA negotiations with China are a major priority. DAFF is working with industry as part of the government’s broader FTA advocacy program to develop Chinese business community support for an agreement with Australia.
The aim of an FTA with China would be to liberalise agricultural trade between the two countries and to achieve access to the markets being sought by Australia’s agricultural sector.
DAFF is responsible for animal and plant health, and quarantine measures, and has a leading role in developing the SPS provisions of FTAs.
Benefits of the FTAs
Australian agricultural exports have grown significantly over ten years but FTAs have the potential to deliver further advantages to our exporters in many markets where barriers to trade still exist.
Key markets in which Australia could benefit from recently concluded, current or possible free trade negotiations include:
Japan
- Japan is Australia’s largest export market and trading partner
- Two-way goods trade between Australia and Japan was valued at $76 billion in 2008-09, a 39 per cent increase on 2007-08
- Japan is also Australia’s largest export market for agricultural products, valued at over $4 billion
- Japan is Australia’s largest market for beef and dairy products
- The 2006 FTA feasibility study found that an FTA between Australia and Japan could boost Australia's GDP by $A39 billion over 20 years
Republic of Korea
- Korea was Australia’s 3rd largest export market in 2008 (goods and services exports of $20.2bn) and sixth-largest overall trading partner (total two-way trade of $27.2bn in 2008)
- The Republic of Korea is also Australia’s sixth largest export market for agricultural products, valued at over $1 billion in 2008-09
- A joint non-Government report found that an Australia-Korea FTA could boost Australia’s GDP by up to US$22.7 billion over 14 years (A$30 billion using the 2005 exchange rate)
China
- Independent research has predicted that under full liberalisation from 2006, Australia's real GDP would rise by an additional $24.4 billion over 10 years
- Australia's agricultural and food exports to China have increased substantially over the past decade to a value of around $2.7 billion in 2008-09, making China our 3rd largest agricultural and food export market
- Wool is by far Australia's largest agricultural export to China, worth $1.4 billion in 2008-09. Hides and skins, worth around $442 million in 2008-09, were Australia's second largest agricultural export to China. Dairy products and cotton, worth around $228 million and $165 million respectively, were Australia's third and fourth largest agricultural and food exports to China
Malaysia
- Economic modeling conservatively estimates that an FTA would increase Australia’s GDP by $1.9 billion over 20 years
- In 2007-08, Australian agricultural and food exports to Malaysia were $817 million, including $200 million in dairy exports
- Malaysia is Australia’s tenth largest export market
ASEAN region
- Australian agriculture and food exports to ASEAN countries were valued at $4.3 billion in 2007-08
- Key agricultural exports to ASEAN countries include grains $1.2 billion, dairy $906 million, cotton $214 million, and live animals $390 million