China-Australia free trade agreement will benefit both nations

The Australian and Chinese governments signed a long-awaited free trade agreement in a ceremony in Canberra on Wednesday, freeing up trade between the two countries. The FTA will benefit producers and consumers in the two countries. According to a preliminary estimation conducted by the Australian Centre for International Economic Studies, the FTA will boost Australian GDP growth by 0.7 percentage point and China's GDP growth by 0.1 percentage point.

The historic agreement was signed by Australia's Trade Minister Andrew Robb and China's Commerce Minister Gao Hucheng.

The China-Australia free trade agreement (ChAFTA) will greatly reduce the threshold for bilateral trade and investment flows, and establish a more open, convenient and standardized institutional arrangement for future development of bilateral economic and trade relations.

Informed opinion takes the view that the FTA will be helpful in exploring bilateral cooperation potential. It will further boost the two-way flow of funds, resources and personnel, promote deeper all-round bilateral economic and trade relations, enhance the level of cooperation, and provide important content to enrich the comprehensive strategic partnership between the two countries.

The FTA provides a very high level of liberalization in goods. 96.8 percent of China's tariff lines will be liberalized, directly using the linear tariff reduction method. Tariff reduction will be complete on 95 percent of tariff lines within five years, and the time-frame for the remaining products will not exceed 15 years.

Tariffs on all Australian products exported to China will be reduced, with 100 percent liberation. 91.6 percent of tariffs will be reduced to zero when the FTA comes into effect, 6.9 percent of lines will be tariff-free in the third year, and the remaining 1.5 percent will be free within five years.

From the trade point of view, 97 percent of China's imports from Australia will be liberated. 85.4 percent will be tariff-free when the FTA comes into effect, and the figure will increase to 92.8 percent within five years. The proportion of tariff-free Australian imports from China will also be 85.4 percent when the FTA enters into force, within three years the figure will be 98.4 percent, and within five years all goods will be exempt from charges.