Formalities kick-off ChAFTA

Federal Trade and Investment Minister Andrew Robb announced the economic boom attached to the historic ChAFTA deal would follow on from the official ‘exchange of notes’ in Sydney.

The ceremony took place between Australia’s Ambassador-designate to China Jan Adams and Chinese Ambassador Ma Zhaoxu at government trade offices.

It formally confirms that both Australia and China have now fulfilled their respective domestic requirements to enable ChAFTA to enter into force, starting December 20.

Mr Robb said it was a “most significant moment” given the federal government’s key objective – despite a tight timeframe – was to see ChAFTA operational before the end of 2015.

“This will deliver a very material early harvest for our exporters in the form of two rounds of annual tariff cuts in quick succession,” he said.

“The first round of tariff cuts will occur on December 20 followed by a second round on January 1, 2016.

“This will save our exporters hundreds-of-millions-of-dollars in extra tariff payments next year alone compared to if entry into force had been delayed until sometime in 2016.

“The National Farmers’ Federation estimates our agriculture sector alone is set to save around $300 million.”

Mr Robb said the outcome would immediately enhance Australia’s competitive position in the world’s second biggest economy which will be good for growth and job creation.

He said the dairy industry expected ChAFTA to result in 600 to 700 extra jobs in the first year alone.

“This is the most favourable trade deal that China has done with any developed economy and it will put us in the box seat to further capitalise on China’s rising middle class and increasing demand for the types of high quality goods and services that Australia can and does provide,” he said.

Mr Robb’s statement said on entry into force, more than 86 per cent of Australia’s goods exported to China - worth more than $86 billion in 2014 – would enter duty free, rising to 96pc when ChAFTA was fully implemented.

He said ChAFTA’s entry into force rounded out a “powerful trifecta” of trade deals the government had sealed with three of the nation’s four largest export markets – China, Japan and Korea – covering 49pc of national exports.

Together with the Trans-Pacific Partnership Agreement (TPP), the agreements would provide unprecedented access for innovative Australian enterprises to the world’s largest and most dynamic markets, he said.

“In this critical post-mining boom period, the government has very deliberately pursued an aggressive trade and investment agenda to support the transition of our economy by adding diversity to what we do,” he said.

Ratification of the ChAFTA agreement was threatened mid-year by a vehement campaign driven by the unions and backed by Labor which raised concerns about insufficient job protections.

But the NFF and other farm groups like the Australian Dairy Industry Council lobbied to ensure it went ahead with dairy warning the loss of two early tariff cuts would cost their industry $60 million.

In mid-October, ADIC chair Noel Campbell told Fairfax Agricultural Media the nation’s customers in China were “bewildered by the whole thing”.

“Their expectation was that once the deal was initially signed in the middle of this year it was all done and dusted,” he said.

But Labor proposed legislation which addressed concerns about labour market testing and other aspects of the ChAFTA, which the government eventually backed to allow enabling legislation to be passed.

At the time, Opposition leader Bill Shorten said the legislative “safeguards” allowed Australian exporters and consumers to secure the benefits of ChAFTA while ensuring the trade deal does not jeopardise employment opportunities for Australian workers.

The anti-ChAFTA campaign also saw the NFF collaborate with the Minerals Council of Australia (MCA) and Australian Chamber of Commerce and Industry (ACCI), to warn about potential economic losses if the two early tariff cuts were blocked.

China is Australia’s largest agriculture export market valued at $8b in 2014 with dairy exports worth $347m and beef exports $655m.