Australian forwarders expect to be busy with ChAFTA

The Famous Pacific Shipping Group (FPS), a sea- and airfreight network covering the Australian states of Victoria, New South Wales, South Australia and Tasmania, said it is gearing up for an expected boom in freight traffic to and from China and Australia. In June the governments of Australia and China signed the China-Australia Free Trade Agreement (ChAFTA), which would remove most of the trade tariffs between the two nations.

The ChAFTA treaty has been in talks since 2005, and now the Australian Joint Standing Committee must review the agreement and report back to Parliament which will consider if it needs amending. Once these talks are completed, the Australian government is expected to ratify the trade deal. When both countries are satisfied with the agreement, ChAFTA should take effect 30 days later.

Presently, China levies tariffs on most imports from Australia, such as beef, milk and cream. Only around 8 percent of these imports are duty-free. When the agreement is in force, more than 85 percent of Australian goods will be duty-free, increasing to 93 percent in four years, and eventually 95 percent. Meanwhile, Australia’s tariffs on 80 percent of imports from China will be removed immediately, if the agreement commences; the removal of remaining tariffs will happen in stages, with full removal in four years.

“Our biggest trade lane is China, and since the announcement of the signing of the agreement we have been inundated with enquiries from both importers and exporters about how the agreement will benefit them,” said Karen Marsh, customs manager for FPS. “With the removal of customs tariffs, goods will be cheaper for both countries, and this can only result in a healthy increase in shipments between Australia and China.”

Until the trade deal takes effect – possibly later this year – Marsh said she is advising her clients about whether or not their products will qualify for the removal of the tariffs under the agreement, based on the origin of the goods. “We are currently consulting with importers in order to determine if it’s in their best interests to apply for tariff concessions now – a process which can be costly and take considerable time – or wait until [ChAFTA] is fully implemented.”

China is already Australia’s largest trading partner and its top export market for agricultural produce. The new ChAFTA agreement is expected to encourage trade and investment, and improve market access.  Although China is the world’s second-largest economy, it currently has few free trade agreements with developed countries, so ChAFTA is likely to provide Australian business with an advantage over international competitors.

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