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Australian Parties Agree On China FTA

by Mary Swire,, Hong Kong

21 October 2015

The Australian Government has mustered enough support to pass legislation to implement the China-Australia Free Trade Agreement (ChAFTA).

Trade Minister Andrew Robb said: "Before ChAFTA can enter into force, Australia has to complete its necessary domestic processes and this includes the passage of the implementing customs tariff and rules-of-origin bills that are currently before the Parliament. To ensure this occurs, the Government has agreed to provide further clarity and comfort in regard to key issues raised by the Opposition."

"Crucially, the provisions that we have agreed to with Labor will not in any way change or contravene the binding commitments we have made to China through our concluded FTA negotiations. Nor will they in any way discriminate against our biggest trading partner."

Negotiations toward the FTA were concluded in November 2014, and the agreement was signed on June 17, 2015. Upon the agreement's entry into force, more than 85 percent of Australia's exports to China will be tariff free, rising to 95 percent on full implementation. The ChAFTA has an in-built mechanism to allow for further liberalization. Bilateral trade in goods and services between the two countries was valued at more than AUD160bn (USD115.4bn) in 2013-14.

Labor leader Bill Shorten had raised concerns that the ChAFTA "undermines safeguards for jobs" by effectively permitting "unrestricted access to the Australian labor market by Chinese workers."

Robb said that to provide the opposition Labor Party with greater assurances of the Government's commitment to the principle that Australians should always have priority in the labor market, it will amend an existing work visa regulation. "The amendment will simply prescribe the existing requirement under policy that employers seeking to sponsor skilled workers on 457 visas under work agreements will have to demonstrate that they have made recent and genuine efforts to recruit local Australian workers first," he explained.

The Government has also agreed to make minor amendments to guidelines for companies seeking a work agreement, and the Department of Immigration and Border Protection will include in its annual report details about the number of work agreements signed and the number of 457 visa holders engaged under the agreements. In addition, the Government will undertake an earlier than planned evidence-based review of the Temporary Skilled Migration Income Threshold.

"The agreement reached with the Opposition represents both a sensible outcome, which does not increase the current costs to business associated with 457 visa holders, and major progress in terms of doing all we can to get this agreement into force as soon as possible so that the substantial benefits can begin to flow," Robb concluded.

The Business Council of Australia welcomed the news. Chief Executive Jennifer Westacott said: "Ratifying the agreement by the December 31 deadline enables the full benefit of a double tariff cut to be realized for the Australian economy. A double tariff cut will immediately boost the competitiveness of a range of Australian sectors, in particular the coal industry which will now see all tariffs eliminated on exports to China from 2017. Coal exports to China were worth around AUD8.3bn in 2014."

TAGS: tax | business | free trade agreement (FTA) | tariffs | trade treaty | Australia | China | agreements | legislation | tax rates | regulation | trade association | trade | services | Immigration | Immigration

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