New MCA study supports China Australia Free Trade Agreement

The China Australia Free Trade Agreement (ChAFTA), to be formally signed today in Canberra, is a watershed achievement in Australia’s relationship with China. 

The deal with the world’s largest trading economy marks a new phase in Australia’s relationship with North Asia, building on the recent agreements with Japan and Korea.

The MCA applauds the work of Prime Minister Tony Abbott and Trade and Investment Minister Andrew Robb and the negotiating team in completing an outstanding job to secure this outcome.

A new study released today by the MCA, China, minerals and energy and the China Australia Free Trade Agreement, examines the economic dividends available from an even closer relationship with the world’s largest trading nation and the nation that last year consumed 50 per cent of the world’s metals. 

The study, undertaken by Trading Nation, highlights the fact that Chinese imports from Australia already account for more than 5 per cent of the Australian economy.

The report dismisses suggestions that a moderation in China’s growth rate will significantly slow demand for Australian resources and energy exports.

The report argues that Chinese demand for Australian resources and energy, already worth $80 billion annually, will continue to grow. The authors forecast that the absolute growth of the Chinese economy in the next decade ‘could be twice as great as when its economy was surging during the first decade of the century’.

The FTA will deliver early and practical dividends, including the elimination of tariffs that add nearly $600 million in costs to the bilateral minerals and energy trade.

The agreement will eliminate the 3 per cent coking coal tariff immediately and the 6 per cent tariff on thermal coal within 2 years.  All remaining tariffs on minerals commodities will be eliminated.  These apply to a wide range of products including alumina, zinc, nickel, copper and uranium.

As the report highlights, the deal will also provide new opportunities for Australia’s mining equipment and technology services (METS) providers in China’s minerals sector.

The ChAFTA is a ‘living agreement’ that provides for further rounds of liberalisation as well as review processes to ensure that the gains from the agreement are not circumvented by so called non-tariff barriers.

The MCA urges prompt parliamentary consideration of the free trade agreement, noting that the tariffs on coal alone add nearly a burden of $18.5 million per month to Australian export costs.  (The tariff reductions and other market opening only occur once the agreement ‘enters into force’ on completion of parliamentary processes in both countries).

A one page summary of key findings is attached. The full report is available at

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