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Free Trade Agreements (FTA)
Australia’s trade policy seeks to maximise trade benefits for all Australians by securing market gains through multilateral, regional, and bilateral approaches. FTAs with individual countries or regional groupings are an important part of this strategy.
Australia has concluded FTAs with New Zealand (ANZCERTA), the United States (AUSFTA), Thailand (TAFTA) and Singapore (SAFTA). FTA negotiations are underway with Chile, China, the Gulf Cooperation Council (GCC), Japan and Malaysia. Australia, in conjunction with New Zealand, is also negotiating a regional FTA with the Association of South East Asian Nations (ASEAN).
Economic studies examining the possibility of an FTA with Mexico and the Republic of Korea are currently being undertaken.
Australia has recently agreed to undertake a joint feasibility study into the merits of an FTA with Indonesia and India.
- What are FTAs?
- Why have FTAs?
- Current FTAs
- Australia's FTA Agenda
- DAFF’s role in FTAs
- Benefits of the FTAs
Australia’s FTAs are ‘living agreements’ that continue to develop and evolve long after signing. For more information on completed Free Trade Agreements, including contact details for further information and advice, visit the Australian Government Online Guide to Australia’s FTAs
What are FTAs?
FTAs are international agreements between two or more countries to eliminate tariffs on substantially all trade between them. Modern FTAs generally go beyond eliminating tariffs to include commitments on services, Customs cooperation, intellectual property, foreign investment, and possibly other issues that will assist trade.
Eliminating restrictions between FTA partners leads to greater integration of economies and mutual benefits, including more export opportunities and product choices in the importing country.
The Australian Government will enter into an FTA only if it believes the agreement:
- will deliver significant economic benefits to Australians
- is consistent with WTO rules
- will result in substantial trade liberalisation in goods, services and investment, and
- is in line with Australia’s broader interests with the other party or parties.
Comprehensive FTAs should deliver benefits either faster or beyond what can be achieved through the WTO.
Why have FTAs?
The Australian Government considers FTAs as an integral part of international trade policy. Australia’s former Trade Minister restated this view in the Australian Government’s 2007 Trade Statement:
"The Australian Government aims to achieve FTAs that are comprehensive, providing liberalisation across all sectors…Australia’s objective is to ensure that FTAs liberalise international trade and support the move towards a more open global trading system."
FTAs increase Australia’s trade and investment opportunities, and are particularly beneficial when they seek to remove barriers in highly protected markets or gain a foothold in potential or expanding markets.
By facilitating access to these markets, FTAs provide significant commercial benefits to Australia’s exporters and in turn, wider economic benefits to all Australians.
Helping our exporters is especially important. One in five Australian jobs – or one in four jobs in regional Australia – is directly or indirectly connected to exports, which provide a quarter of Australia’s regional income.
Furthermore, a large proportion of Australian resource-based products are exported, including:
- 65 per cent of farm products
- 75 per cent of fish products
- 60 per cent of forest products.
The export opportunities and associated benefits that FTAs provide are therefore very important for Australia. Australian consumers also benefit from FTAs by having a wider range of products to choose from, and from lower prices.
FTAs can help improve the competitiveness of Australian industry through access to lower priced inputs and by encouraging producers to be more efficient to remain competitive against imports.
FTAs can be negotiated and implemented faster than other trade arrangements.
They can contain animal, plant and food health and safety (sanitary and phytosanitary, or SPS) provisions, but Australia’s approach is that these provisions should not provide new obligations in this area, or weaken the integrity of our SPS systems.
Australia will not negotiate on specific SPS measures or on trade-offs between market access and the application or lowering of SPS measures and standards. The objective of SPS provisions in FTAs is to build cooperation and consultative arrangements on animal, plant and food health and safety matters.
Current FTAs
Australia has FTAs with the United States (entered into force January 2005), Thailand (January 2005), Singapore (July 2003) and New Zealand (1983), and is negotiating agreements with ASEAN, Chile, China, the GCC, Japan and Malaysia.
Australia is undertaking a feasibility studies for a bilateral FTA with Indonesia and India, and an economic relations study with Mexico and the Republic of Korea which includes an examination of the possibility of an FTA.
Under our existing FTAs, Australian exporters enjoy duty-free access on all products into New Zealand and Singapore. Similar duty-free access is being phased in for Thailand.
Under our FTA with the United States, Australian exporters will eventually enjoy duty-free access on 97 per cent of tariff lines and improved tariff quota access for some dairy products exempt from tariff elimination. Sugar is the only product on which improved access has not been achieved under this agreement.
In all four existing FTAs, Australia has committed to eliminate tariffs into our market, phasing them out in the case of Thailand and the United States.
Australia is seeking similar high-quality FTAs with other key trading partners. The negotiations are working to identify market access problems, eliminate tariffs, and address other access restrictions such as import licensing.
Australia's FTA Agenda
DAFF’s role in FTAs
DFAT leads and coordinates FTA negotiations on behalf of the Australian Government.
DAFF works with DFAT to ensure the interests of agricultural industries are taken into account in the development of Australian negotiating positions.
DAFF is involved in all FTA negotiations and processes, and in developing strategies to maximise FTA gains.
DAFF and DFAT work together to consult industry on identifying market access priorities and defensive interests, and to keep industry informed of the government’s approach to the negotiations.
FTA negotiations with China are a major priority. DAFF is working with industry as part of the government’s broader FTA advocacy program to develop Chinese business community support for an agreement with Australia.
The aim of an FTA with China would be to liberalise agricultural trade between the two countries and to achieve access to the markets being sought by Australia’s agricultural sector.
DAFF is responsible for animal and plant health, and quarantine measures, and has a leading role in developing the SPS provisions of FTAs.
Benefits of the FTAs
Australian agricultural exports have grown significantly over ten years but FTAs have the potential to deliver further advantages to our exporters in many markets where barriers to trade still exist.
Key markets in which Australia could benefit from current or possible free trade negotiations include:
Japan
- In 2005-06, two-way trade in goods and services totalled $53.9 billion, making Japan our largest trading partner.
- Japan is also the largest market for our agricultural exports – estimated at $6 billion in 2005‑06.
- Japan is our largest market for beef, offal, dairy products, fish, canola, and pet and livestock foods; and it is our second largest market for horticultural goods.
China
- Independent research has predicted that under full liberalisation from 2006, Australia's real GDP would rise by an additional $24.4 billion over 10 years.
- Australia's rural exports to China have trebled over the past decade to a value of more than $3 billion in 2005, making China our 3rd largest rural export market.
- Wool is by far our largest rural export to China, worth $1.3 billion in 2005. Cotton was our 2nd largest rural export to China in 2005 with an estimated value of $374 million. In 2005, our beef accounted for 98 per cent of China's total beef imports. In 2005, we supplied 12 per cent of China's dairy imports.
Malaysia
- Economic modeling conservatively estimates that an FTA would increase Australia’s GDP by $1.9 billion over 20 years
- In 2005, Australian agricultural exports to Malaysia were $518 million, including $215 million in dairy exports
- Malaysia is Australia’s eleventh largest export market
ASEAN region
- Australian agricultural exports to ASEAN countries were valued at $2.8 billion in 2005
- Key agricultural exports to ASEAN countries include dairy $850 million, cotton $390 million, and live animals $264 million
Chile
- Chile is Australia’s third largest trading partner in Latin America, with two-way trade in goods and services valued at $574 million in 2006.
- These FTA negotiations are a step towards a broader strategic relationship with Chile and Australia’s relations with Latin America in general.
Gulf Cooperation Council
- The GCC is an important market for Australian meat and livestock exports. In 2005-06, it took 33 per cent of our total live animal exports and around nine per cent of our non-bovine meat exports. Including bovine meat exports, the sector generated combined export earnings of about $501 million.
- In 2004, the GCC took 46 per cent of our total barley exports with a value of nearly $600 million. In 2005-2006, it took at least 28 per cent of Australia's total barley exports, valued at $166 million.
- In 2005-06, the GCC took 20 per cent of our total cheese and curd exports, valued at $170 million and five per cent of our total milk and cream exports, valued at $78 million.
Source: www.dfat.gov.au and Australian Food Statistics 2005