What the Australia-China FTA means for small businesses
Key points in this article
- Agriculture and processed food changes
- Australian-owned subsidiaries in China
- Skilled worker mobility
Agriculture is faring the best in the new FTA, with tariffs on dairy products, wine and beef to be reduced over time. Other sectors to benefit include:
- processed food
- tourism and travel services
- manufacturing, construction and engineering
- architecture and urban planning and employment services.
A surge in exports to China
The nation’s exports to China have expanded by an average 25% per year over the past decade, making it by far our most important export market. But until now, the surge in exports to China has been heavily dominated by resources.
Here’s the Department of Foreign Affairs and Trade’s snapshot of how the changes are helping Australian industries:
Agriculture and processed food
- Removal of all tariffs on our dairy products, which can be as high as 20% (to be enacted within four to 11 years).
- Removal of tariffs of 12 to 25% on beef (over nine years).
- Removal of tariffs on live animal exports of 10% (within four years).
- Removal of tariffs on sheep meat of 12 to 23% (over eight years).
- Removal of tariffs of 14 to 20% on wine (over four years).
- Removal of tariffs on all horticulture products, ranging up to 30% (mostly within four years).
- Immediate elimination (post implementation) of the 3% tariff on barley.
- An Australia-only duty-free quota for wool in addition to continued access to China’s WTO wool quota.
- The removal of tariffs on seafood, including 15 and 14% respectively on rock lobster and abalone, over four years.
- The removal of tariffs across a range of processed foods including fruit juice and honey.
Agriculture and processed foods are enjoying a number of tariff removals under the FTA
Tourism and travel-related services
China has guaranteed that Australian service suppliers are able to construct, renovate and operate wholly Australian-owned hotels and restaurants in China.
Australian travel agencies/tour operators are also able to establish wholly Australian-owned subsidiaries in China for tours within China for both domestic and foreign travellers.
Construction and engineering services
China is providing new market access to Australian companies undertaking joint construction projects with Chinese counterparts in Shanghai.
Australian companies will be exempted from business scope restrictions, allowing them to undertake a wider range of commercially meaningful projects.
China made its first ever FTA commitment on manufacturing services, guaranteeing access for wholly Australian-owned companies to provide contract manufacturing services covering a wide range of manufactured products.
Architecture and urban planning services
In the best offer China has made to a FTA partner, China is taking into account Australian experience in assessing applications for higher-level qualifications, allowing Australian architectural and urban planning firms to obtain more expansive business licenses to undertake higher-value projects in China.
Other services sectors
Australian providers are benefiting from new Chinese commitments allowing them to offer a range of services, including through subsidiaries based in China that can be wholly Australian-owned, in the following sectors:
- software implementation
- research and development
- services incidental to manufacturing
- building cleaning
- printing of packaging materials
- translation and interpretation services
- real estate
- environmental services.
Having Australian-owned subsidiaries in China is a real positive of the FTA
Business and skilled worker mobility
The FTA is supporting increased trade and investment between the two countries by reducing barriers to labour mobility and improving temporary entry access within the context of each country’s existing immigration and employment frameworks and safeguards.
It is providing improved access for a range of Australian and Chinese skilled service providers, investors and business visitors, supporting investment and providing business with greater certainty.
Innovative new Investment Facilitation Arrangements (IFAs), which are operating within the framework of Australia’s existing visa system, are also providing greater flexibilities for companies to respond to unique economic and labour market challenges.