Free Trade Agreements (FTA’s) open up opportunities for Australian exporters and investors to expand their businesses into key overseas markets. FTAs can improve market access across all areas of trade — goods, services and investment — and help to maintain and stimulate the competitiveness of Australian firms. This benefits Australian consumers through access to an increased range of better value goods and services.Australia’s FTA negotiations are increasingly focused on the so-called ‘behind the border’ issues. A range of factors such as standards, professional qualifications, intellectual property rights and competition policies in trading partner countries may impact heavily on Australian companies exporting to those markets. Such barriers are often more of a problem for businesses than ‘border measures’ such as tariffs and quota restrictions which have been the focus of trade negotiations traditionally but which have become relatively less important over time as average tariff levels have fallen.
Australia’s FTAs
Australia has nine FTAs currently in force with the following countries:
- New Zealand
- Singapore
- Thailand
- US
- Chile
- The Association of South East Asian Nations (ASEAN) (with New Zealand)
- Malaysia
- Korea
- Japan
The countries covered by these FTAs account for 42 per cent of Australia’s total trade. The long awaited China FTA is currently still in negotiations and will enter into force when domestic processes have been completed. With China accounting for 23 per cent of Australia’s total trade – a lot of people are holding their breath waiting on this one.
Australia is currently engaged in six other FTA negotiations – two bilateral FTA negotiations: India and Indonesia; and four plurilateral FTA negotiations: the Trans-Pacific Partnership Agreement (TPP), the Gulf Cooperation Council (GCC), the Pacific Trade and Economic Agreement (PACER Plus), and the Regional Comprehensive Economic Partnership Agreement (RCEP). The additional countries covered by these negotiations account for a further six per cent of Australia’s total trade.
How businesses benefit from FTA’s:
Free trade agreements are used by businesses, large and small, by exporters, importers and investors.
Some FTA use by business is overt, such as accessing a preferential tariff rate in the FTA partner market.
Other use is more subtle, such as the evaluation of risk in business decision-making.
All FTAs are different and need to be looked at separately.
But the ways in which businesses use them are common.
For any further information regarding Free Trade Agreements, please kindly head here or contact us directly.
