A neat infographic from DFAT highlights Australia's most important export and import trade with China.
Australia exports huge volumes of resources to China, predominantly in the form of iron ore, coal, gold and crude petroleum as denoted by the graphic below.
Meanwhile we import from China billions of dollars worth of IT-type stuff, clothes, prams, furniture, sports equipment and other things that we can't make so cheaply Down Under.
In short, it's exactly the type of trade and investment scenario which should benefit significantly from a Free Trade Agreement (FTA) through the removal of tariffs.
Said to be worth more than $18 billion over a decade, Australia has signed a "landmark" Free Trade Agreement (FTA) with China. From the Minister for Trade & Investment and the Prime Minister:
"The landmark China-Australia Free Trade Agreement (ChAFTA) will unlock substantial new benefits for Australians for years to come.
ChAFTA will add billions to the economy, create jobs and drive higher living standards for Australians.
Australian businesses will have unprecedented access to the world’s second largest economy. It greatly enhances our competitive position in key areas such as agriculture, resources and energy, manufacturing exports, services and investment.
Building on trade deals already concluded with Korea and Japan, ChAFTA forms part of a powerful trifecta of agreements with Australia’s three largest export markets that account for more than 61 per cent of our exports of goods.
More than 85 per cent of Australian goods exports will be tariff free upon entry into force, rising to 93 per cent in four years. Some of these goods are currently subject to tariffs of up to 40 per cent.
On full implementation of ChAFTA, 95 per cent of Australian goods exports to China will be tariff free.
Australian households and businesses will also reap the benefits of cheaper goods and components from China such as vehicles, household goods, electronics and clothing, placing downward pressure on the cost of living and the cost of doing business.
Significantly, tariffs will be abolished for Australia’s $13 billion dairy industry. Australia’s beef and sheep farmers will also gain from the abolition of tariffs ranging from 12-25 per cent and all tariffs on Australian horticulture will be eliminated.
Tariffs on Australian wine of 14 to 30 per cent will go within four years, while restrictive tariffs on a wide range of seafood, including abalone, rock lobster, and southern bluefin tuna will also cease within four years.
Tariffs will also be removed on a range of Australian resources and energy products, including the eight per cent tariff on aluminium oxide on the first day of the Agreement, benefitting our exports worth around $1.3 billion a year. The tariffs on coking coal will be removed on day one, with the tariff on thermal coal phasing out over two years.
Tariffs will be also eliminated on a wide range of Australian manufactured goods, including pharmaceutical products and car engines.
The Australian Government has secured the best ever market access provided to a foreign country by China on services, with enormous scope to build on an export market already worth $7 billion.
Legal services, financial services, education, telecommunications, tourism and travel, construction and engineering, health and aged care services, mining and extractive industries, manufacturing services, architecture and urban planning, as well as transport, among others, will all benefit from being able to do business in China more easily."
Concludes the media release:
"China is Australia's largest two-way trading partner in goods and services (valued at more than $150 billion in 2013), our largest goods export destination ($95 billion in 2013), and our largest source of goods imports ($47 billion in 2013). China is Australia’s largest services export market ($7 billion in 2013)."
The signing of the FTA with China looks to be a fine coup* for Australian trade and investment.
*Unless, that is, you happen to be in the unfortunate position of being a rock lobster, a tuna fish, or one of our live exported cattle, since all tariffs on live animal exports will also be eliminated.