How the ChAFTA Will Affect Imports from China to Australia

Importing Chinese goods into Australia has just got a whole lot easier with the implementation of a Free Trade Agreement (FTA) between Australia and China. This agreement has taken a long time to develop but the implementation of it will give huge benefits to business owners and consumers. Let’s take a look at what exactly the FTA will do, how it works, and some of the key benefits to Australia and China.

What is the China Australia Free Trade Agreement (ChAFTA)?

A FTA is an agreement between nations to lift all possible barriers and taxes, with the aim of encouraging the trade between the nations. A new FTA between Australia and China is planned to come into effect this year. This will increase competitiveness with other countries, like New Zealand, who currently enjoy a FTA with China. It will also add to investment, which the Chinese Government estimates to be $1.44 trillion over the next 10 years.

The negotiations that have been underway since 2005 have finally been completed, and will see significant impacts in Australia. The amount of goods imported and exported will be considerably increased, and the market opened to the world’s second largest economy. In fact, China is already our largest trading partner, accounting for $49 billion of imports in 2013. Of this $49 billion, nearly $5 billion was imports of telecom equipment and parts. Computers ranks a close second, and furniture, mattresses and cushions come in third.

Exports will do considerably well also, with the horticultural, wine and agricultural industry getting significant benefits and cuts to taxes. On full implementation of the ChAFTA, 95% of exports will be tariff free.

How will importers benefit?

As an importer, the goods you bring into Australia from China will not incur the same amount of taxes and duties as they currently do, making it cheap to buy Chinese goods.

The best aspect of this agreement for importers is the full elimination of tariffs on goods coming into Australia. 80% of imports will have tariffs lifted once the law is passed through parliament. The elimination of tariffs for the remaining 20% will happen in stages, with products like nuts, plastics, textiles and aluminum within the first two years. More specialised items such as car parts, glass, and electronic parts will take up to four years.

There will also be a review process within the first three years that allows the two trading nations to work out what more can be done to promote trade between them.

When will it come into force?

The final text of the FTA has been decided and the two ministers of the retrospective countries signed a declaration of intent, meaning intent to go and review the legal changes needed. These changes will be introduced as law and should be in effect by April 2015.

The Free Trade Agreement between China and Australia should provide a boost to both economies, and many types of businesses will be affected directly or indirectly. Goods that you import into Australia from China, that are already extremely competitive prices, have just got cheaper. If you are interested in finding out more about sourcing goods from China, contact Easy Imex today.

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    About the Author: Adam

    Adam Gilbourne is the Founder and Managing Director of Easy Imex. Since 2005, he has helped hundreds of companies worldwide to successfully import from China. He has a large expertise on product sourcing, quality assurance, and supply chain management.

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