Australia and China signed the China-Australia Free Trade Agreement (ChAFTA) on 17 June 2015, which will enter into force on 20 December 2015. Trade negotiations have secured many future benefits for Australian business with Australia`s largest trading partner, China. It is mainly those who work in the agriculture, manufacturing, services, investment, resources and energy sectors who benefit. China has also agreed to a special clause that recognizes Australia as a “most-favoured-nation” (MFN). This allows Australian companies to access the same agreements that China refuses to enter into in free trade agreements with other nations (such as the United States) that could offer better access to the Chinese market. Under RCEP, parts of all Member States would be treated equally, which could provide an incentive for companies in RCEP countries to seek suppliers within the trading region. But obviously, the payment is worth it. These trade policy developments will improve market access and help Australian exporters harness the full potential of the world`s largest economy. The ChAFTA concludes the government`s “trade deal” with Australia`s three largest export markets, after concluding similar deals with Japan and South Korea earlier this year. These three North Asian markets together accounted for more than half of Australia`s exports last year.
ChAFTA offers considerable benefits for Australia`s energy resources and exports. Once effective, 93% of Australia`s current resource, energy and industrial exports will enter China duty-free and reach 99.9% if fully implemented. It is important that the recently introduced 3% coal coking tariff is immediately abolished and that the 6% tariff for thermal coal expires within two years. After nearly a decade and 21 rounds of intense negotiations, Australian Prime Minister Tony Abbott and Chinese President Xi Jinping shook hands this week on a comprehensive free trade agreement. The ChAFTA allows 85% of Australia`s merchandise exports to enter China duty-free after they come into force, which rises to 93% in four years and 95% if fully implemented. While many of the details are not yet complete (official documents will be signed in 2015), the government estimates that the deal will generate economic benefits of $18 billion (1.1% of GDP) over a decade. “I don`t think we should abandon it,” she said. “It`s a whole series of products that go to China, and we wouldn`t want to put that at risk, even though many of them are clearly part of China`s trade movements right now.” There will be a work and holiday agreement in which Australia will grant Chinese nationals up to 5,000 visas for work and holidaymakers.  The free trade agreement was signed between the two countries on June 17, 2015 in Canberra, Australia. The agreement – known as Chafta – eliminated tariffs on Australian barley and sorghum when it entered into force in December 2015, while cutting tariffs on Australian seafood, sheepmeat and horticulture. .