It’s been a big year for the government on the foreign affairs front. Firstly there were Free Trade Agreements with Korea and Japan.
Now Australia has signed a Free Trade Agreement with China. While this is a complex document and affects a wide range of areas this post will only cover the part of the agreement that will impact on small business and the goods we import and export.
For small business and consumers, the biggest change is the gradual elimination of tariffs on Chinese imports. This includes removing the 5% tariff on electronics and white goods. This should result in lower prices and greater availability of Chinese products.
If you are a primary producer, there are big changes ahead. Currently, there are tariffs ranging from 12-25% on all primary production products, over the next few years these tariffs will be progressively abolished.
This will make the importing of Australian primary produce cheaper for China. In the next few years we should see a lot more demand for our products from China.
This may have an impact on prices and the quantities demanded. See below for the timeline to abolish these tariffs.
• dairy: tariffs up to 20 per cent eliminated within 4 to 11 years.
• beef: tariffs of 12 to 25 per cent eliminated over 9 years.
• wine: tariffs of 14 to 20 per cent eliminated over 4 years.
• wool: a new Australia-only duty free quota, in addition to continued access to China’s WTO quota.
See the diagram below to see an illustrated view of our dealing with China.