China is a major export market for Australian manufactured products, with exports worth over $2 billion in 2013. ChAFTA creates new opportunities for Australian manufacturers; including those seeking to supply goods to China’s rapidly expanding middle class. China currently applies tariffs of up to 47 per cent on some of Australia’s manufactured products, including pharmaceuticals, mining machinery, medical equipment, paper products, automotive parts, clothing and film.
Key outcomes for manufactured goods include:
Elimination of 3 to 10 per cent tariffs on pharmaceutical products, including vitamins and health products, either on entry into force or phased out within four years. China is Australia’s largest market for pharmaceuticals, with exports worth $559 million in 2013.
Elimination of the 10 per cent tariff on car engines within four years. China is an important market for Australian car engines, with exports worth over $102 million.
Elimination of tariffs ranging from 6.5 per cent to 14 per cent on plastic products within four years. China is Australia’s second-largest market for plastic products, with exports of over $96 million.
Elimination of the 3 per cent and 8 per cent tariffs on precious stones within four years. China’s imports from Australia were worth around $45 million.
Immediate elimination of the 4 per cent tariff on orthopaedic appliances, which account for exports worth $37 million.
Elimination of the 6 and 10 per cent tariffs on aluminium plates and sheets within four years. These exports are worth around $31 million.
Elimination of the 6.5 to 15 per cent tariff on make-up and hair products within four years. The exports of these products are worth over $18 million.
Elimination of the 10 per cent tariff on centrifuges within four years, accounting for exports worth over $14 million.
Elimination of the 21 per cent tariff on pearls within four years. China’s imports from Australia in this area total around $3 million.
ChAFTA provides greater certainty by locking in zero tariffs on a range of other manufactured products, including wood chips, radiata pine products, some electrical and communications equipment, and some paper-related products.
A small number of products sensitive to China’s economy or culture are excluded from tariff concessions, including some fertilisers, wood and paper products. These products are excluded in China’s other FTAs, and accounted for only 0.1 per cent of China’s imports of resources, energy and manufactured products from Australia in 2013.
ChAFTA provides improved market access for Australian exporters of complementary medicines. At the same time it paves the way for closer collaboration between regulators, registration authorities, and relevant professional bodies on both sides to facilitate trade in traditional Chinese medicines and complementary medicines. It does so in a manner consistent with all relevant regulatory frameworks.
Non-tariff barriers
ChAFTA improves the transparency of Non-Tariff Measures (NTMs) and ensures such measures do not create unnecessary obstacles to bilateral trade. A specific mechanism to review and address NTMs on any good on a case-by-case basis will be established.
Trade remedies
Australian producers will continue to have full access to trade remedies available under the WTO including anti-dumping and countervailing measures. In addition, ChAFTA includes a temporary bilateral safeguard measure which may be applied if either an Australian or Chinese domestic industry faces “serious injury” due to a surge in imports following a reduction in tariffs under the Agreement.
China’s products into Australia
Consistent with other FTAs, Australian tariffs on resources, energy and manufactured goods will be eliminated under ChAFTA. Taking into account the impact of tariff reductions on sensitive industries, the 5 per cent tariff on some products within the automotive, steel, aluminium, plastics, canned fruit, carpets, clothing and footwear sectors will be phased-out within two or four years to allow industry to adjust.