ASEAN-Australia-New Zealand Free Trade Area (AANZFTA): Australian Guide to Annexes and Associated Documents

This Guide was prepared by Australian Government officials. It does not form part of the Agreement signed by Australian, New Zealand and ASEAN member governments.

Annex 1: Schedules of Tariff Commitments

AANZFTA Fact Sheets [PDF 623 KB]

Full text of Annex 1

Annex 2: Product Specific Rules of Origin

AANZFTA Fact Sheet - Rules of Origin [PDF 148 KB]

Full text of Annex 2

Annex 3: Specific Services Commitments

Two-way trade in services between Australia and ASEAN is worth around $18 billion and there is considerable potential for Australia’s services exports (worth $8.4 billion) to increase. Services account for over 29 per cent of Australia’s total exports to ASEAN. Both exports to and imports from ASEAN are dominated by travel and transportation services, with more than half of Australia’s travel exports to ASEAN being education-related. Communication services, construction, and financial services and insurance, each accounted for less than 2 per cent of total services exports to ASEAN.

Most ASEAN countries control foreign participation in their services sectors very tightly and maintain significant regulatory restrictions. These include foreign equity limits, joint venture requirements, geographic restrictions on the location of foreign firms; numerical or other limits on the temporary entry and stay of foreign personnel; and in the case of professional services, nationality restrictions on the right to practise. Some of these restrictions may be relaxed by regulatory authorities on a discretionary case-by-case basis, or on a unilateral basis (either indefinitely or for defined periods of time). Consequently, there can be significant gaps between applied levels of market openness and the levels that are “bound” in the WTO or other trade treaties, which creates uncertainty for foreign service suppliers.

The AANZFTA negotiations provided an important opportunity for Australia to enhance certainty and transparency for Australian services suppliers in sectors of priority trade interest, such as education, financial, professional and telecommunications services, including by closing the gap between applied and WTO-bound levels of market openness, strengthening regulatory disciplines and creating a platform for ongoing economic engagement on services trade issues.

Under AANZFTA, ASEAN countries have made market access and regulatory commitments that will enhance certainty and transparency for services suppliers in the region.

Some examples include “WTO plus” market access improvements in (see below for more details of ‘WTO plus’ gains in sectors of Australian priority trade interest):

There is a built-in agenda to review market access commitments in services three years after entry into force of the Agreement, and periodically thereafter as determined by the FTA Joint Committee. The aim of these reviews is for Parties to further improve specific commitments so as to progressively liberalise trade in services.

Australia also has the right to request that an ASEAN country extend to Australia any more favourable treatment (than provided for in AANZFTA) which is afforded to a third country as part of a future ASEAN-wide FTA. This kind of “MFN on request” approach is consistent with the approach in Australia’s bilateral FTAs with Singapore and Thailand.

Some examples of enhanced “WTO plus” regulatory disciplines in AANZFTA which will benefit Australian services exporters in the region include requirements on Parties to:

Key "WTO plus" Gains from ASEAN Countries

The following is a summary of key gains in services commitments.

Professional Services

Education Services

In higher education:

In other education services Thailand has committed to allowing 49 per cent foreign equity in foreign language tuition services and to allowing temporary entry for teachers employed by firms established in the secondary, higher, adult education (professional and short course), and foreign language tuition services sub-sectors (period of stay of one year with possibility of extension). Malaysia has committed to allowing joint ventures with 49 per cent foreign equity in primary, secondary (general and technical/vocational) and other education services.

Financial Services

In banking services, the Philippines and Indonesia have committed to foreign equity of 55 and 51 per cent respectively for acquisition of an existing domestic bank. Indonesia has also increased by six, the number of cities in which foreign banks and joint venture banks may open offices (Padang, Manado, Balikpapan, Banda Aceh, Jayapura, Ambon). Laos has committed to maintaining no market access or national treatment limitations on the supply of banking services through commercial presence or cross-border supply.

In insurance services, Indonesia has committed to allowing foreign equity participation of 80 per cent for foreign services suppliers. In other financial services, Malaysia has made commitments to allow joint venture requirements with foreign equity limits of 49 per cent for financial leasing and financial planning services.

All ASEAN countries have agreed to disciplines which promote greater transparency and timely processing of licensing applications from financial services suppliers.

Telecommunications

In telecommunications, Laos has committed to allow wholly foreign owned enterprises to supply most services, although joint ventures are required for telex services, electronic mail, voice mail and online information and data base retrieval. Malaysia has committed to allowing foreign equity of 49 per cent for acquisition of shares in existing licensed operators (the option of a locally incorporated joint venture with aggregate foreign equity of 49 per cent is also bound in some sub-sectors, e.g., mobile telephone services and data and message transmission services) and the Philippines has made new commitments in private leased circuit services, data and message transmission services and value-added services, such as electronic mail, with foreign equity limits of 40 per cent.

In addition, ASEAN countries have agreed to pro-competitive regulatory disciplines to ensure that foreign suppliers can compete on a level-playing field with major domestic suppliers, which may own or control essential network facilities and infrastructure.

See AANZFTA Fact Sheet - Telecommunications [PDF 147 KB]

Construction Services

In construction services, Indonesia and Malaysia have committed to allowing joint ventures with foreign equity of 55 and 49 per cent respectively. Brunei has committed to allow foreign equity in construction firms of 50 per cent. Laos has committed to allowing 100 per cent foreign owned firms to operation in its construction sector.

Mining and Energy Related Services

In mining and energy related services, the Philippines made commitments that provide for up to 100 per cent foreign equity, subject to the President’s approval, for oil and gas exploration and development and 40 per cent foreign equity for geothermal exploration and development; coal exploration and development; pipeline transport; and services related to energy distribution or power generation (up to 100 per cent foreign equity is allowed for construction of power plants under the “build-operate-transfer” scheme). Thailand has committed to allowing 49 per cent foreign equity for firms providing “related scientific and technical consulting services” in relation to oil and gas exploration (eg., geological and geophysical prospecting and surveys).

The Philippines has made commitments that allow up to 100 per cent foreign equity for construction of large scale mining development projects covered by a financial and technical assistance agreement under the Philippine Mining Act. Indonesia and Malaysia have also made commitments that cover construction work for mining. These commitments provide for 55 per cent and 49 per cent foreign equity respectively, subject to joint venture requirements. Laos has committed to allowing 100 per cent foreign owned firms to undertake construction work related to mining.

Environmental Services

In environmental services, Laos has made commitments that allow for wholly foreign owned firms to provide services through commercial presence. The Philippines has made commitments in relation to sewerage services that provide for foreign equity of 40 per cent.

Computer and Related Services

In computer and related services, Laos and Malaysia’s commitments contain no market access or national treatment limitations for the establishment of a commercial presence or cross-border supply of services. Thailand has made new commitments on programming services, systems maintenance and software training services with foreign equity of 49 per cent.

Tourism and Travel Services

The Philippines has no market access or national treatment limitations in relation to accommodation facilities, including hotels and resorts; Malaysia has committed to allowing aggregate foreign equity of 49 per cent in joint ventures in hotel and restaurants; food serving; travel agencies and tour operators; and Brunei has committed to allowing foreign equity of up to 70 per cent in joint ventures in tourism accommodation facilities.

Other Horizontal Commitments

Some ASEAN countries have made commitments under AANZFTA that improve on that horizontal or cross-cutting commitments that apply to all services sectors listed in their Services schedule. These mainly cover investment-related issues.

Malaysia has committed to a higher threshold of RM10m (WTO level is RM5m), which will trigger approval requirements for the acquisition, merger or takeover of a Malaysian business by foreign interests.

Laos has committed to allowing three forms of commercial presence in the services sectors listed in its schedule: joint venture enterprises; business cooperation by contract; and 100 per cent foreign-invested enterprises. Laos has also committed to allowing foreign natural persons and companies to lease land for up to 75 years and to own premises on the leased land.

Australia’s Schedule of Services Commitments Under AANZFTA

Australia’s schedule of services commitments under AANZFTA contains various improvements on its existing WTO commitments. These take the form of new commitments, either at the horizontal or sectoral level, or amendments to existing WTO commitments. Specifically, these “WTO plus” improvements are as follows.

Horizontal Commitments

The binding of monetary thresholds for notification and approval of foreign investment in new businesses ($A10 million) and acquisitions of existing businesses ($A50 million).

Sectoral Commitments

For further information, see AANZFTA Fact Sheet – Services [PDF 151 KB]

Full text of Annex 3

Annex 4: Movement of Natural Persons (MNP)

The ability of investors, goods sellers and service suppliers from one country to enter and stay temporarily in another country to explore business opportunities, negotiate and enter into contracts and transact business (supply services) is a key hallmark of deeper economic integration. Business stakeholders in Australia have raised issues concerning delays in obtaining entry visas or other permits in some ASEAN countries, difficulties in obtaining relevant forms and documentation and a lack of transparency in decision-making. AANZFTA aims to provide a platform for addressing these concerns through a movement of natural persons (MNP) chapter.

The AANZFTA MNP chapter provides a framework for Parties to make commitments on temporary movement of service suppliers, investors and goods sellers and other persons engaged in regional trade and investment. The chapter contains obligations which require Parties to publish information on temporary entry requirements, process completed applications for temporary entry and stay promptly and to notify applicants, on request, about the status or outcome of the application. Any fees imposed in relation to the processing of immigration formalities are required to be reasonable and in accordance with domestic law.

From entry into force of AANZFTA, the commitments of most ASEAN countries under the MNP chapter will relate only to service suppliers, consistent with the WTO GATS framework. However, most ASEAN countries have improved their WTO commitments in this area, including Indonesia, Malaysia, Singapore, the Philippines and Thailand (e.g. length of stay for intra-corporate transferees); Malaysia and Thailand (education services suppliers) and the Philippines (professional services) – see below for further details of ‘WTO plus’ gains. The MNP chapter provides a platform for countries to broaden and deepen their commitments in future and thereby facilitate freer movement of skilled labour within the region across all sectors of the economy.

Key "WTO Plus" Gains on MNP Commitments from ASEAN Countries

At this stage, the commitments of most ASEAN countries in their schedules to the MNP chapter relate only to service suppliers, consistent with the WTO GATS framework. Nevertheless, most ASEAN countries have improved on their GATS commitments as follows.

Indonesia has made a general commitment to allow entry and stay of intra-corporate transferees (“directors, managers and technical experts”) for up to six years and business visitors for 60 days, with possible extension to 120 days.

Laos has made provision for business visitors (60 day period of stay) and intra-corporate transferees - executives, managers and specialists (six month period of stay with possibility of renewal for a further period of one year). Malaysia has increased the period of stay for intra-corporate transferees, specialists and other professionals to enter and stay for a maximum of ten years, although there are some exceptions to this commitment, including professional services, telecommunications and banking services. Thailand has clarified that its “business visitor” commitments (90 day period of stay) cover both “service sellers” and “persons responsible for establishing a commercial presence” and has committed to an increased period of stay for intra-corporate transferees (up to four years). Singapore has extended its commitments for intra-corporate transferees to all services sectors, not just those listed in its services schedule (as per its WTO GATS commitments). In addition, it has committed to a longer length of stay for intra-corporate transferees under AANZFTA than under the GATS, namely, a maximum of eight years, as distinct from five under the GATS.

The Philippines has made commitments that cover not only services suppliers, but also goods sellers and investors. These include provision for:

The MNP chapter provides a platform for countries to broaden and deepen their commitments in movement of natural persons in future and thereby facilitate freer movement of skilled labour within the region.

Australia’s MNP Commitments Under AANZFTA

Australia has made new commitments on MNP under AANZFTA that go beyond its existing WTO commitments on temporary entry for service suppliers. Specifically, these “WTO plus” improvements are as follows:

For further information, see AANZFTA Fact Sheet – Movement of Natural Persons [PDF 145 KB]

Full text of Annex 4

Associated Documents

Implementing Arrangement containing agreed Work Program of Economic Cooperation Projects

The economic cooperation package comprises an Economic Cooperation chapter text and a Work Program which outlines the assistance that will be provided to parties to implement AANZFTA in eight areas of focus (“components”) linked to different aspects of the AANZFTA. The broad activities currently covered by the Work Program are:

The Work Program does not have Treaty-level status but forms part of the AANZFTA package. The Implementing Agreement formally integrates the Work Program into the overall FTA package.

The Work Program will be implemented over five years after entry into force of AANZFTA and is estimated to cost in the range of $20 – 25 million. The funding will be borne largely by Australia and New Zealand, with ‘in kind’ contributions from ASEAN member states. This funding reflects proposed Economic Cooperation projects deemed high priority in the initial planning phase. However, the work program provides flexibility for emerging and changing priorities of parties to the FTA to be addressed through an annual planning process. The work program is in addition to Australia’s ongoing economic cooperation assistance to ASEAN and complements the ASEAN Australia Development Cooperation Program Phase II ($57 million 2008 – 2015).

For further information, see AANZFTA Fact Sheet – Economic Cooperation [PDF 91 KB]

Full text of Implementing Arrangement containing agreed Work Program of Economic Cooperation

Recognition of Vietnam's Market Economy Status

Vietnam is accorded WTO Market Economy Status (MES) as part of the AANZFTA package. This change puts Vietnam on the same footing as other WTO Members in relation to dumping, and subsidy and countervailing, investigations, as Australia agrees to not have recourse to special procedures allowed under Vietnam’s terms of accession to the WTO.

Letter from Australia's Minister for Trade to Vietnam's Minister of Industry and Trade

Memorandum of Understanding on Article 1 (Reduction and/or Elimination of Customs Duties) of the Trade in Goods Chapter

The Understanding affirms that the commitments relating to the reduction or elimination of tariffs under AANZFTA do not prevent Parties from applying measures consistent with the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal (the Basel Convention), or other relevant international agreements.

Full text of Memorandum of Understanding

AANZFTA and the CER Relationship

An exchange of letters between Australia's Minister for Trade [PDF 34 KB] and New Zealand's Minister of Trade [PDF 289 KB] on the application of AANZFTA between Australia and New Zealand

See also Background to the Negotiations

1The share of foreign lawyers in Indonesian law firms must not exceed 20 per cent and must be limited to five foreign lawyers per firm.

2Agriculture, architecture, building, business administration, management, computer science, construction, information systems, dental services, economics, education, engineering, environmental, surveying, health, community services, land and marine resources, animal husbandry, language studies, law, legal studies, life sciences, manufacturing, mathematics, medical science, medicine, multi-field education, nursing, pharmacy, physical sciences, science, services, culinary and hospitality, transport, veterinary science, visual and performing arts.

Australian Guide to Chapters

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