Free Trade Agreements

A ____ ____ ____ is an international treaty between two or more economies that reduces or eliminates certain barriers to trade in goods and services, as well as investment. Australia negotiates ____ ____ ____s to benefit Australian exporters, importers, producers and investors by reducing and eliminating certain barriers to international trade and investment.

What are some examples of FTAs currently in force?

• Australia-New Zealand (ANZCERTA or CER): 1st January 1983

• Singapore-Australia (SAFTA): 28th July 2003

• Australia-United States (AUSFTA): 1st January 2005

• Thailand-Australia (TAFTA): 1st January 2005

• Australia-Chile (ACI-FTA): 6th March 2009

ASEAN-Australia-New Zealand (AANZFTA):

• 1st January 2010 for eight countries: Australia, New Zealand, Brunei, Burma, Malaysia, the Philippines, Singapore and Vietnam.

• For Thailand: 12th March 2010.

• For Laos: 1st January 2011.

• For Cambodia: 4th January 2011.

• For Indonesia: 10th January 2012.

What are some examples of FTAs not yet in force?

• Thailand-Australia Free Trade Agreement (TAFTA)

• Australia-United Kingdom Free Trade Agreement (A-UKFTA)

• Trans-Pacific Partnership (TPP)

• Singapore-Australia Free Trade Agreement (SAFTA)

ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA):

• It commenced January 1st 2010 and covers the industry sectors of goods, services, investment and intellectual property.

• The AANZFTA involves the ASEAN (Association of Southeast Asian Nations) countries of Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

• It eliminates tariffs on 96% of Australian exports to ASEAN nations by 2020, and AANZFTA-certified goods have their tariffs reduced when they entered ASEAN countries.

• International arbitration is established to resolve foreign investment disputes and the FTA sets minimum standards for the treatment of foreign investors and their investments with signatory countries.

What are some examples of changes to tariffs for the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA):

• Meat and livestock: tariffs on most meat tariff lines phased to 0% and access for live bovine imports guaranteed.

• Dairy products: tariffs phased to 0% except for a few products in Indonesia, the Philippines and Malaysia.

• Iron and steel: tariffs on most products phased to 0% or to 10% or less.

• New passenger motor vehicles: elimination of all tariffs in the Philippines.

Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA):

• A bilateral free trade agreement that covers all trans-Tasman trade in goods, including agricultural products and services. It took effect in January 1983.

• All tariffs and restrictions on import and export between the two countries are prohibited.

• Minimise government industry assistance and export subsidies and incentives to ensure a level playing field.

• Food standards are standardised.

What are the benefits for Australian-owned businesses as a result of FTA's? Pt. 1 of 2

• Increased overseas market access as Australian-owned businesses can sell more products overseas as the price will be less for consumers leading to increased profit.

• Increased competition from foreign-owned businesses leading to reduced market share.

• Cost of importing supplies will be less for the Australian-owned businesses so they are able to manufacture products more cheaply.

• More challenging for manufacturing industries as they compete on the international markets with pricing.

What are the benefits for Australian-owned businesses as a result of FTA's? Pt. 2 of 2

• Provides job opportunities in Australia when sales increase.

• Complexities of free trade agreement clauses such as 'Rule of Origin' whereby Australian owned businesses need to determine qualification and pay the appropriate fees.

• Australian business owners can conduct business travel more efficiently to the country they deal with through the 'movement of natural persons'.

• Increased opportunities for foreign direct investment in Australian businesses and/or Australian owned businesses investing into overseas businesses.

What are the challenges to Australian-owned businesses as a result of FTA's?

• More challenging for manufacturing industries as they compete on the international markets with pricing.

• Increased competition from foreign owned businesses leading to reduced market share.

• Higher labour costs in Australia leading to Australian owned businesses being less competitive in global markets.

• Complexities of free trade agreement clauses such as 'Rule of Origin' whereby Australian owned businesses need to determine qualification and pay the appropriate fees.