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China Australia Free Trade Agreement (ChAFTA)

Regulation Impact Statement – Department of Foreign Affairs and Trade

On 17 June 2015, Australia’s Trade and Investment Minister and the Chinese Commerce Minister signed the China-Australia Free Trade Agreement (ChAFTA). Negotiations on a free trade agreement with China commenced in May 2005. Following 21 formal rounds of negotiations, then Prime Minister Tony Abbott and President Xi Jingping announced the conclusion of negotiations on 17 November 2014. In 2014, two-way trade in goods and services reached $152.5 billion, making China Australia’s largest trading partner. The Office of Best Practice Regulation (OBPR) considers that ChAFTA is likely to be of major significance to the broader economy with significant impacts on competition. Significant barriers to Australian agricultural exports will be removed across a range of products including beef, dairy, lamb, wine, hides and skins, horticulture, barley and seafood. The reduction or elimination of tariffs on Australian exports to China under ChAFTA is expected to increase demand in China for goods produced in Australia. A Regulation Impact Statement (RIS) was prepared and certified by the Department of Foreign Affairs and Trade, and has been assessed as compliant by the OBPR. However, the OBPR considers that the RIS was not consistent with best practice because it did not contain a degree of detail and depth of analysis that is commensurate with the likely impacts of the proposal. As the free trade agreement has been assessed by the OBPR as having a substantial impact on the economy, the Australian Government RIS process requires a post-implementation review to be completed within five years of ChAFTA being implemented. The RIS estimates the average annual regulatory net saving at $1,350 per annum. The OBPR has agreed to the regulatory saving.