18 June 2015

Australia signs Free Trade Agreement with China (CHAFTA)

The Australian and Chinese government officially signed the Free Trade Agreement (ChAFTA) on June 17th 2015, which will open markets, free trade and strengthen investment between both countries. With total two-way trade exceeding $150 billion in 2014 the new agreement will add enormous benefits to businesses when importing or exporting from China

Both governments are wanting to bring the FTA into force as soon as possible - meaning we could see this operative in next 3 - 6 months once legislation has been ratified by both governments.

Majority of goods imported in Australia will now be duty free once ratified except for textile , footwear and clothing items which will stay at the current rate of 5% and phased down every year thereafter and only be duty free around 2020

The below Certificate of Origin (COO) is required to be provided for preferential rates.

Australian Businesses Exporting to China

Australia's business will be looking to capitalize on China's growing middle class and their hunger for Australian products as the new agreement will mean 85% of all Australian exports will enter China tariff-free, rising to 95% on full implementation.

The agricultural and food sector will see the most benefit with:

  • All tariffs on dairy products to be phased out over 11 years
  • Tariffs on wines to be removed over four years
  • Tariffs on beef gone within nine years
  • The removal of tariffs across a range of processed foods including fruit juice and honey

What to do now?

Contact your Customs Broker

First you should contact your local Mainfreight Customs Broker to set up a time to discuss if your goods will benefit from this FTA.

Contact your supplier

Once you have done this, you should contact your China supplier to discuss the extent to which the goods are of Chinese origin. You will need to have this conversation now to allow your supplier time to assess and arrange the required documentation prior to the FTA commencing.

The Australian Border Force (ABF) will require proof that the goods are of Chinese origin. The goods cannot be produced in another country, entered into China, then exported as Chinese goods.

Get in quick for tariff rulings

Once the ChAFTA inception date is formally announced, there will be a rush of people gaining rulings and requesting information, this will mean a backlog at both ends. It is best to get in quickly, talk to your Broker and supplier now, before the rush.

Should you require any further clarification please visit the ChAFTA website or contact your local Customs Broker or Account Manager.

 

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