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- Discover which countries Australia has Fair Trade Agreements with and how you can benefit.
Understanding Free Trade Agreements
If your business involves the export or import of goods or services, you should make it your business to find out how to extract maximum value from Free Trade Agreements (FTAs).Read more about the following FTAs and how they can benefit your export business:
- Victorian Government and Free Trade Agreements
- Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA)
- Singapore-Australia FTA (SAFTA)
- Thailand-Australia FTA (TAFTA)
- Australia-US FTA (AUSFTA)
- Australia-Chile FTA (ACI-FTA)
- ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA)
- Australia-Malaysia Free Trade Agreement
- Korea-Australia Free Trade Agreement (agreed but not concluded)
Countries enter Free Trade Agreements (FTAs) in order to facilitate the free exchange and flow of goods and services between them, regardless of national borders. These agreements usually contain preferential tariff treatment with respect to trading goods.
There are also liberalising trade provisions relating to services, investment, intellectual property, electronic commerce, government procurement and competition policy. Australia’s recent FTAs include:
- Australia – New Zealand Closer Economic Relations effective since 1983 (CER)
- Singapore – Australia FTA (SAFTA) effective since 2003
- Thailand – Australia FTA (TAFTA) effective since 2005
- Australia – United States FTA (AUSFTA) effective since 2005
- Australia – Chile (ACI-FTA) effective since 2009
- ASEAN – Australia – New Zealand FTA (AANZFTA) effective since 2010
- Australia-Malaysia Free Trade Agreement effective since 2013
- Korea-Australia Free Trade Agreement (agreed Dec 2013 but not yet concluded)
Other FTA negotiations include proposed agreements with China, the Gulf Cooperation Council, India, Indonesia, Japan, Malaysia, various pacific island nations and, collectively, members of the Trans-Pacific Partnership (Brunei Darussalam, Chile, New Zealand, Singapore, Peru, Malaysia, Vietnam and the United States).
The Victorian Government works closely with the Federal Department of Foreign Affairs and Trade (DFAT), to maximise opportunities for Victorian industry from Free Trade Agreements (FTAs), such as the recently concluded FTA with the Association of South East Asian Nations (ASEAN) and New Zealand (AANZFTA).
An important role of the Victorian Government is to engage with industry to ensure that Victorian business makes the most of opportunities presented by the agreements. Sectors such as agriculture, processed food and wine (in particular dairy products), services (business, legal, financial, telecommunications, education) and investment are key areas of liberalisation in many FTAs.
The value of using an FTA is not limited to any particular size of business. There is no minimum or maximum value of shipment that qualifies for FTA opportunities. So the FTA offers real advantage for any business that trades or plans to trade internationally.
The clearest benefits are for businesses that import or export goods between FTA countries. In most cases, the cost of exporting or importing goods will be reduced. Businesses that do not make use of these transactions savings miss out on additional profit and may give competitors a cost-competitive advantage.
For businesses who export services, FTAs offer some important new market opportunities as well as clear and transparent service export procedures.
There are three key steps involved in accessing FTA benefits:
- Calculating the possible benefits for particular products;
- Assessing whether products qualify for the FTA benefits (that is, checking if there is a tariff reduction for the specific product); and
- Implementing FTA compliance (eg. obtain a certificate of origin).
The Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) came into effect in 1983 and led to the removal of trade barriers on between 60 and 80 per cent of goods and was extended to include trade in services. ANZCERTA is now the main instrument governing economic relations between Australia and New Zealand and is considered an FTA success story, having being recognised internationally for the broad nature and relative speed of its liberalisation.
Read more about the ANZCERTA
The Singapore-Australia FTA (SAFTA) became operational in 2003. In addition to coverage of tariffs, the agreement promises increased market access for Australian exporters of services, in particular education, environmental, telecommunications, and professional services. The agreement also provides a more open and predictable business environment across a range of areas, including competition policy, government procurement, intellectual property, e-commerce, customs procedures and business travel.
Read more about the Singapore-Australia FTA
The Thailand-Australia FTA (TAFTA) entered into force in 2005, at which time Thailand had tariffs on automobiles and a range of agricultural products in place. Under the TAFTA, Thailand eliminated its tariffs on around 53 per cent of all items and a further 41 per cent of Thai tariffs moved to zero in January 2010. With some exceptions, remaining tariffs will phase to zero in 2015 or 2020. The TAFTA also provides for increased ease of trade in services, investment and business mobility.
Read more about the Thailand - Australia FTA
The Australia-US FTA (AUSFTA) came into effect in 2005. It is a comprehensive agreement that immediately eliminated over 97 per cent of US tariffs on most of Australia's non-agricultural exports, and almost two thirds of US tariffs on Australian agricultural products. In addition, Australian industry now has access to the $415 billion US Federal Government procurement market, and those of 31 US States.
Austrade has developed a commercial strategy to assist Australian businesses to take advantage of export opportunities arising from the AUSFTA. Austrade operates 11 offices across the US and have employed export facilitators to provide specialist advice on the US market to Australian exporters.
Read more about the Australia - US FTA
The Australia - Chile FTA entered into force in 2009. The agreement covers goods, services and investment with commitments that reinforce the multilateral trading system. Key aspects of the agreement include the elimination of about 97 per cent of tariffs on existing merchandise trade with 100 per cent elimination on most goods by 2015; access to government procurement markets; and protection for intellectual property rights.
Read more about the Australia - Chile FTA
AANZ FTA affects all goods and services imports, exports and investments between Australia, New Zealand and the ten South-East Asian countries of ASEAN (Vietnam, Malaysia, Philippines, Indonesia, Thailand, Brunei, Singapore, Cambodia, Laos and Myanmar). AANZFTA entered into force in 2010 – Australia, New Zealand, Brunei, Burma, Laos, Malaysia, the Philippines, Singapore Thailand and Vietnam.
Read more about the ASEAN AANZ FTA
The Australia-Malaysia FTA came into effect on 1 January 2013. The Agreement builds on benefits already flowing to the Australian economy from the ASEAN-Australia-New Zealand Free Trade Agreement, which started for Australia and Malaysia in 2010. Australian exporters will benefit from improved market access for a variety of goods and services, including liquid milk and processed foods, automotive vehicles and parts, iron and steel. Under MAFTA, the remaining Australian tariffs on Malaysian goods have been removed, helping lower the cost of consumer goods for Australians.
In December 2013 this FTA was agreed, but is not yet concluded. For a fact sheet visit the DFAT website.
The Australian Trade Commission (Austrade) has produced a free online presenation and webinar with Business Development Managers discussing trends and opportunities in specific sectors, including the role that MAFTA will play in further opening the market for Australian organisations.