Free Trade Agreements

Free Trade Agreements

A Free Trade Agreement (FTA), is an agreement between two or more countries with the aim of liberalizing the trade of goods and services and access to investment between those countries. By increasing trade and investment, it is intended that the economies will grow to the benefit of the countries involved.

An FTA does this by removing barriers to trade, such as eliminating most (if not all) tariffs and removing quotas on goods that can be exported or imported. Many FTAs also address other barriers to trade, including:

  • Intellectual property protection
  • Restrictions on foreign service providers
  • Government procurement policies that favor domestic industry
  • Customs procedures

Image result for australian free trade agreement map

Source: https://www.mfat.govt.nz/assets/FTA-maps/FTA_All-Agreements.jpg

Each FTA is negotiated separately and while there are common elements, each reflects the negotiating powers and the particular issues for the countries involved. As such, each is slightly different and care needs to be taken when identifying opportunities.

China-Australia Free Trade Agreement (ChAFTA)

The China–Australia Free Trade Agreement (ChAFTA) is a bilateral Free Trade Agreement (FTA) between the governments of Australia and China. The China-Australia Free Trade Agreement (ChAFTA) entered into force on 20 December 2015.

“this historic agreement with our biggest trading partner will support future economic growth, job creation and higher living standards through increased goods and services trade, and investment. China, with its population of 1.4 billion people and rapidly rising middle class, presents enormous opportunities for Australian businesses well into the future.” – Australia’s Minister for Trade and Investment Andrew Robb

Some of the deregulation involved in  The China–Australia Free Trade Agreement (ChAFTA) includes:

  • the removal of all tariffs on Australian dairy products within 4 to 11 years
  • the removal of tariffs of 12 to 25 percent on beef over 9 years
  • the removal of tariffs on lie animal exports within 4 years
  • the removal of tariffs on wine over 4 years
  • the removal of tariffs on all horticulture products within 4 years
  • the immediate elimination of the 3 percent on barley
  • the removal of tariffs on all resources and energy products
  • the removal of tariffs on transformed resources and energy products
  • the removal of tariffs of up to 10 percent on pharmaceuticals
  • the removal of tariffs within 4 years for other manufactured products

ASEAN Australia New Zealand Free-Trade Agreement (AANZFTA)

ASEAN (Association of Southeast Asian Nations) is one of the fastest-growing markets in the world, with enormous business and investment potential for New Zealand. countries include New Zealand, Australia, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Viet Nam.

Key points include:

  • Elimination of tariffs on 99% of exports to key ASEAN markets by 2020. This represented about $50 million of annual duty savings based on levels of trade when the Agreement was signed.
  • Rules of Origin in AANZFTA allow for ‘cumulation’. This means New Zealand goods used in products made in ASEAN countries or Australia are considered as local content. Cumulation makes New Zealand products an attractive supply option for businesses in the region.
  • Lower transaction costs for businesses because of better cooperation between the countries when it comes to regulations.
  • Higher commercial profile for New Zealand companies in ASEAN markets.
  • Better opportunities and access in the region for New Zealand service sector businesses such as education, tourism, construction and transport. 
  • Better protection and security for New Zealanders investing in ASEAN economies, with a range of investment protection disciplines and provision for recourse to binding investor-state arbitration procedures.
  • More streamlined and transparent procedures for immigration applications and processes for New Zealanders working in the ASEAN region.
  • Measures to streamline customs procedures and cooperation, sanitary and phytosanitary measures, standards, technical regulations and conformity assessment procedures, electronic commerce, intellectual property and competition policy.

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

The Australia – New Zealand Closer Economic Relations Trade Agreement (known as ANZCERTA or the CER Agreement) is one of the most comprehensive bilateral free trade agreements in existence. It covers substantially all trans-Tasman trade in goods, including agricultural products, and was the first to include free trade in services.

The Agreement’s central provision is the creation of a World Trade Organization (WTO) – consistent Free Trade Area encompassing Australia and New Zealand.

The objectives of ANZCERTA are to:

  • strengthen the broader relationship between Australia and New Zealand
  • develop closer economic relations between the Member States through a mutually beneficial expansion of free trade between New Zealand and Australia
  • eliminate barriers to trade between Australia and New Zealand in a gradual and progressive manner under an agreed timetable and with a minimum of disruption
  • eliminate barriers to trade between Australia and New Zealand in a gradual and progressive manner under an agreed timetable and with a minimum of disruption

The Pacific Agreement on Closer Economic Relations (PACER-Plus) Plus

The Pacific Agreement on Closer Economic Relations (PACER) is an umbrella agreement between members of the Pacific Islands Forum (the Forum Island Countries plus Australia and New Zealand) which provides a framework for the future development of trade cooperation.

participating countries include Australia, Cook Islands, Federated States of Micronesia, Kiribati, Nauru, New Zealand, Niue, Palau, Republic of the Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.

Key points include:

  • A new regional trade and economic agreement provides a long-term opportunity to create jobs, enhance private sector growth, raise standards of living, and boost economic growth in Forum Island Countries.
  • The Agreement will result in phased market liberalisation that takes account of the economic development and unique challenges of Forum Island Countries.
  • Australia, along with New Zealand, will provide development assistance to help Forum Island Countries to implement PACER Plus and to maximise the benefits from the opportunities it creates.
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