TWO initial rounds of tariff cuts on key agricultural exports valued at about $300 million for agriculture will proceed, after the China-Australia Free Trade agreement (ChAFTA) enabling legislation passed the Federal Senate yesterday.
Concerns about labour market protections sparked a ferocious campaign against ChAFTA by unions over recent months which the federal Opposition backed.
In response, the National Farmers Federation warned that delaying the historic trade deal’s ratification could cost up to $300m in ongoing tariffs on key exports like beef and dairy.
But those fears were allayed when the government agreed to amendments proposed by Labor, in order to pass legislation underpinning the ChAFTA.
Federal Trade and Investment Minister Andrew Robb welcomed the implementing legislation passing the Senate yesterday, saying Australian businesses were “another step closer to realising the enormous opportunities” created by the ChAFTA.
“The government has worked hard to ensure this high-quality agreement with our biggest trading partner enters into force before the end of the year, and today’s vote marks a significant milestone in that process,” he said.
“Entry into force this year will see an immediate round of tariff cuts, followed by a second round of cuts on January 1, 2016, allowing the benefits of the agreement with China to flow quickly through to Australian exporters and consumers.”
Following the vote, Mr Robb acknowledged the Opposition’s support which he said continued Australia’s long-standing tradition of bipartisan support for freer trade.
The Customs Amendment (China-Australia Free Trade Agreement) Bill 2015 and the complementary Customs Tariff Amendment (China-Australia Free Trade Agreement) Bill 2015 passed the Senate after being approved by the House of Representatives on October 22.
The Bills set out Australia’s tariff commitments under ChAFTA and will enable goods that satisfy the FTA’s rules of origin, to enter Australia at preferential rates of customs duty.
Mr Robb said amendments to several regulations – including those the government agreed to with the Opposition last month – would shortly be submitted to the Executive Council for approval.
“The agreement will enter into force when Australia and China have both completed their domestic treaty-making processes and we’re working with China for this to happen as soon as possible,” he said.
The Australian Dairy Industry Council (ADIC) chair Noel Campbell welcomed federal Parliament recognising the importance of swiftly implementing the China trade agreement.
Mr Campbell said China was Australia’s number one dairy market by volume with 136,441 tonnes of dairy product worth $424m exported in 2014/15, representing 18 per cent of total Australian dairy exports by volume, for the calendar year.
In October, he warned delaying ChAFTA’s ratification would cost the Australian dairy industry $60m through losing the two early tariff cuts.
But yesterday he said ChAFTA now placed Australia on a more level playing field with key international competitors.
“Once the agreement enters into force it will enhance the competitive position of Australian dairy - this is good for growth, for jobs, for the economy and a boon for our export market,” he said.
Queensland Labor Senator and former Agriculture Minister Joe Ludwig said Labor's safeguards were about ensuring that when the ChAFTA entered into force, at the earliest opportunity, Australian exporters could realise the benefits of the agreement “while also ensuring local jobs are supported”.
“In short, Labor will support ChAFTA and Australia's economic engagement with China while making improvements to support local jobs, maintaining workplace skills and safety standards and deterring exploitation of overseas workers,” he said.
'Good news' for rural Australia
NSW Nationals Senator John Williams said the trade agreement was good for rural Australia.
“It is good news that Labor has decided to support the free trade deal, or the fairer trade deal, even though the unions are carrying on with their campaign of misinformation,” he said.
“ChAFTA will not allow unrestricted access to the Australian labour market by Chinese workers.
“It will not allow Australian employment laws or conditions to be undermined, nor will it allow companies to avoid paying Australian wages by using foreign workers.”
Senator Williams said ChAFTA would eliminate tariffs of up to 20pc on dairy exports within four to 11 years; 12 to 25pc on beef exports over nine years; 14 to 20pc on wine exports over four years; and wool would have a new Australia-only duty-free quota in addition to continued access to China's WTO quota.
“The wool industry has been terrible since the early 1990s,” he said.
“We used to run 180 million sheep in Australia, in the late 1980s, during the wool boom.
“We are down to around 70 million now (but) the wool industry is looking much better as a result of this agreement.”
ACT Liberal Senator Zed Seselja said total exports between Australia and China was $107.5 billion, with total imports of $52.1b representing total two-way trade of $159.6 b or 23.8pc share of Australia's total trade.
“As we see tariffs come down, there will be benefits for consumers (and) there are benefits for producers,” he said.
“There are benefits for jobs and for people seeking employment in Australia.”
WA Liberal Senator Chris Back said Australia was a trading nation “and we must trade with those countries who desire our products and with whom we can work in terms of our trade agreements”.
He said WA exported 95pc of the 16 million tonnes of wheat it produced every year.
“What hope does Australia have to consume 95 per cent? None,” he said.
“Again, if you take our home state of WA with its iron ore production of about 300 million tonnes-plus a year - almost one million tonnes a day - we do not have the capacity in our country to be able to locally use that iron ore to turn it into steel for various construction and other purposes.”