International Trade Australia Free Trade Agreement

Question: Discuss about the International Trade for Australia Free Trade Agreement. Answer: Introduction ChAFTA, the abbreviated form of the China Australia Free Trade Agreement came into existence on 20th December 2015. This laid the historic foundation of the next phase for the economic relationship of Australia with China. With China being the largest export market for both services and goods, the agreement is meant to unlock the opportunities for Australia in China. Accounting for nearly 30% of the total exports, China has a growing source of foreign investment (Gartrell 2015). The main aim of introducing ChAFTA is to deliver real benefits to the consumers and businesses. The ChAFTA would also be helping the country to gain access to its largest trading partner, China. Being the only country to conclude the FTA (Free Trade Agreement) with China, the business sector in Australia has gained competitive advantage in the global market. Facts and figures The ChAFTA deal between the two countries is expected to deliver immediate benefits to the exporters all over Australia. The trade agreement would be enabling the 85 % of the goods being exported to China to enter duty free. The amount experts entered duty free was worth $ 86 million approximately last year (Gartrell 2015). It has been estimated that the amount of duty free export would rise after the FTA is fully implemented in the future. These duty free exports would be enabling the exporters in Australia to save hundreds of millions of dollars in the form of extra tariff payments in the next year itself. In this regard, the dairy industry in the country is expected to add another 700 jobs in the similar timeframe. This is owing to the fact that the FTA would be helping in eliminating the tariffs of up to 20 % across a variety of products including the food items for infants to cheese products (Ganz 2015). Figure 1: FTA between Australia and China 2014 statistics Source: (dfat.gov.au 2014) According to Fairfax media reports, the FTA would be helping in providing the investors an opportunity to invest in the market whether the business needs expansion or establishing new properties (Gartrell 2015). The agreements would be helping in providing benefits to not only the dairy sector but also the agriculture sector alike. Moreover, the FTA would be facilitating in eliminating the tariffs on beef and wine of up to 25 % and 20% respectively over the coming years (is Informit, EduTV and TVNews 2016). In addition, the duty on the medicines, resources and services are also estimated to be reduced down. The FTA would also enable the customers in Australia to get benefit from the Chinese goods, which could be more affordable to them. The import of Chinese goods in Australia would get the direct benefit from the FTA where the products include the clothing, electronics and other household items as well. Industries growing in the countries in trade Boost in Dairy industry China is the largest dairy market-trading partner of Australia. It has been estimated that the exports have almost doubled to $443 million that what was in 2015 (dfat.gov.au 2014). The dairy industry has been estimated to grow under the ChAFTA over the next few years, owing to the elimination of the tariff of up to 15% on liquid milk. This elimination of tariff would enable the dairy industry to remain competitive in Chinese market over the next 9 years. Improved financial service ChAFTA is believed to strengthen the ties between the financial services in China and Australia. This situation could lead to the provision of new opportunities for the wealth management service providers. The increase in the offshore RMB currency flow into the mainland securities in China would enable in increasing collaboration in the direct equity investments as well (Liao and McDowell 2015). Meat industry Under the ChAFTA, the import duty is estimated to be phased out by as high as 23% over a period of 8 years (dfat.gov.au 2014). This would see the sheep meat and skin export in Australia to be gaining competitiveness with the suppliers in New Zealand. Moreover, the elimination of tariffs would also enable the farmers in Australia to increase returns by proving them with security and confidence in the future of the lamb meat industry. Hotel Management In respective of higher education, China maintains a JSJ List which is a list of preferred overseas education providers (dfat.gov.au 2014). The students from local as well as overseas are advised to enrol in any of the institutions as mentioned in the list. ChAFTA would be helping in ensuring that the Australian higher education providers are included in the JSJ List. This would increase the opportunities to attract the Chinese and Australian students. Moreover, it would also help in maintaining a joint venture between the Chinese universities and private higher education providers in Australia. Conclusion China is the largest trading partner of Australia, which buys almost 33% of the experts from the country. Under the FTA, the exporters would be getting benefits of tariff cuts, which could be giving rise in the opportunities for the investors to invest on the growing market. The elimination of tariff cuts would be luring the potential investors to invest in the market as well. The ChAFTA would be helping in providing the investors an opportunity to invest in the market whether the business needs expansion or establishing new properties in both the countries. References dfat.gov.au, 2014.CHINAAUSTRALIA FREE TRADE AGREEMENT. [online] Available at: https://dfat.gov.au/trade/agreements/chafta/fact-sheets/Documents/chafta-snapshot.pdf [Accessed 22 Aug. 2016]. Ganz, M., 2015. Demystifying the China free trade agreement.Company Director,31(3), p.40. Gartrell, A., 2015.Exporters rejoice as Australia's free trade deal with China finally comes into force. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/federal-politics/political-news/australias-longawaited-free-trade-deal-with-china-finally-comes-into-force-20151218-glqzra.html [Accessed 22 Aug. 2016]. is Informit, W., EduTV, I. and TVNews, I., 2016. China-Australia free trade agreement.Ecodate,30(2). Liao, S. and McDowell, D., 2015. Redback Rising: China's Bilateral Swap Agreements and Renminbi Internationalization.International Studies Quarterly,59(3), pp.401-422.