ChAFTA - Australia China Landmark Free Trade Deal
The President of China, Xi Jinping and the Australian Prime Minister Tony Abbott announced on November 17th that negotiations have been concluded on the China-Australia Free Trade Agreement (ChAFTA). The negotiations ended with the Trade and Investment Minister of Australia, Andrew Robb and the Commerce Minister of China, Gao Hucheng signing a Declaration of Intent to work towards signature of the Agreement.
This declaration of intent was the culmination of over 10 years of work however the actual agreement will not take effect until after 2015 when all the legal points have been drafted and translated. The Australian government has said the free trade deal could add A$20bn
to the overall trade figures between China and Australia.
This agreement continues the recent trend for Australia where they have agreed on landmark deals with other key Asian countries. In April of 2014 they signed a free trade agreement with the Republic of Korea; in July of 2014 they signed an economic partnership agreement with Japan and in August of 2014 they signed the first protocol for a free trade area with the ASEAN bloc and New Zealand.
This adds to the existing trade agreements that they have with Malaysia, Singapore, Thailand, USA, New Zealand and Chile. Also, during the recent visit of the Indian PM Narendra Modi to Australia for the G20 summit, both countries agreed
to begin work on negotiations for a free trade agreement between them. This would ensure that Australia has or would eventually have trade agreements with the largest economies of Asia.
The major benefits of the ChAFTA deal would be that initially, 85% of Australian exports to China will not incur tariffs rising to 95% when the deal is fully implemented. Meanwhile private Chinese investors will gain more freedom to put their money in Australia. The service sectors in both countries will benefit with freer access to industries such as healthcare, tourism, construction, banking and insurance.
Trinidad and Tobago like Australia participates in several bilateral trade agreements which offer benefits to manufacturers as well as service providers located within the country. As a member of Caricom, Trinidad and Tobago benefits from being a part of the Caricom Customs Union which consists of fifteen member nations whose population approaches 16m persons.
Trinidad and Tobago also benefits from participation in the various trade agreements that Caricom has signed. These agreements include:
1.Cariforum/European Community – An asymmetric and progressive trade agreement. Asymmetric because all Cariforum goods enter the EU duty and quota free while Cariforum maintains customs duties on sensitive products from the EU. Progressive because Cariforum tariff reduction is spread over a 25 year transition period with the first reductions in 2011.
2.Caricom/Costa Rica – This agreement offers tariff reductions and or tariff exemption on a wide range of goods. However, a limited number of sensitive products such as fish, chocolate, cigarettes and certain agricultural commodities will continue to attract duties.
3.Caricom/Dominican Republic – Offers duty-free access for all goods other than certain specifically listed goods, including those that are economically sensitive.
In addition to trade in goods, the agreement makes provisions for liberalization of trade in services.
4.Caricom/USA (Caribbean Basin Trade Partnership Act) - Most products manufactured or grown in CBI beneficiary countries are eligible for duty-free entry into the United States.
- provides for duty-free treatment on certain goods with provisions for agricultural products to be afforded duty free treatment at specified times for the year. It also covers trade promotion and facilitation, services, tourism, investment, intellectual property rights and the promotion and development of co-operative activities between the parties.
T&T also participates in the partial preferential agreements between -
6.Caricom/Colombia – Provides free access to Colombia’s market for Caricom producers through the elimination of tariffs and non-tariff barriers on a phased basis. For products not specified under the agreement, the Most Favoured Nation (MFN) treatment will apply.
- One way duty free access to Venezuelan market. Tariffs have been eliminated on 22% of products, (mostly fresh produce, confectionery, cosmetics, jams and jellies, medicines, wooden furniture, horticultural products, spices, processed foods, and toilet preparations). The other 67% of products enjoy tariff reductions while the remaining products face the full tariff duty upon entry into Venezuela.
All of Caricom’s trade agreements are governed by the rules of origin law, which determines the eligibility of products and services to be exempt from tariffs and duties based on a minimum requirement of percentage value addition. These rules vary from agreement to agreement.
The bilateral agreements that Caricom has signed offers companies access to markets of over 505m persons in the EU; 320m in the USA; 26m in the Dominican Republic, Costa Rica and Cuba and 78m in Colombia and Venezuela. Effectively Trinidad and Tobago with its 1.3m population now has market access to close to 1 billion persons.
Trinidad and Tobago has not remained static with regards to the trade agreements it is a party too. Despite having market access through the Caricom bilateral treaties, the Government of Trinidad and Tobago has gone ahead and not only signed a partial scope trade agreement with Panama in 2013 (signed but not yet in force) but they have entered into negotiations with the Governments of Guatemala and El Salvador with the intention of having trade agreements with these countries ready for signature in the near future. These three countries would offer Trinidad and Tobago additional market access to a further 25.6 million persons.