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Ministerial Statement - China-Australia Free Trade Agreement

Speech

Speaker: The Hon Andrew Robb AO MP, Minister for Trade and Investment

Mr ROBB (Goldstein–Minister for Trade and Investment) (15:09): by leave–It gives me great pleasure to
table the China-Australia Free Trade Agreement, known as ChAFTA, and the accompanying national interest
analysis for parliament's consideration here this afternoon.

Earlier today, Chinese Commerce Minister Gao and I had the privilege of signing the agreement and I join with
you, Madam Speaker, in formally welcoming Dr Gao to the House.

Honourable members: Hear, hear!

Mr ROBB: I would like to warmly acknowledge the professionalism, common sense and decency that Minister
Gao brought to the negotiating table; it was fundamental to building the sense of trust necessary to get such an
outstanding outcome.

ChAFTA is indeed a landmark agreement. It is also a high-quality agreement, one that will deliver lasting mutual
benefits for our economies, and our societies in the years and decades ahead. China is already Australia's largest
trading partner, with two-way trade worth around $160 billion, an amount far exceeding our next highest trading
partner. We have an important economic relationship with resources and energy trade as its ballast and vibrant
trade in services, agriculture and manufacturing.

This economy-wide agreement not only locks in and provides for a very strong future trade in goods; it also
provides a springboard for wide-ranging, two-way trade and investment in services, manufacturing, logistics and
environmental management. The agreement will take our already strong relationship to another level, and provide
a road map which helps both our economies contribute as best we can to the economic phenomena and the social
miracle in terms of the billions being released from poverty that we are all seeing across the Asia-Pacific region.

Let me focus on services. Mostly with these free trade agreements, the focus is on goods; I want to shift to
services for a moment. Australia's services are world-class, and are recognised as such in the Asia-Pacific
region and within China. Services such as financial; legal; engineering; health and aged care; secondary, tertiary
and vocational education; project management; construction; design; architecture; tourism and hospitality; IT;
pharmaceuticals; medical research; water management; agricultural production and processing; resources and
energy; film and theatre; and so many others, if you get my point. The thing is, we have literally hundreds of
services that are needed by China and by much of the rest of the region.

There are so many people who will need jobs, coming out of agricultural areas and moving into the cities not
only in China but in many parts of the region. They will need jobs and the jobs are in services. Nine out of 10 of
Australia's jobs are services jobs. That is where the Chinese economy is moving and that is what this free trade
agreement, amongst lots of good things for goods, can deliver: many wonderful things in terms of the services
that we can provide.

The full range of our services make up around 70 per cent of Australia's economy; yet directly contribute only
17 per cent to our exports. This landmark free trade agreement with China opens a huge door for so many of our
service providers. To enable this, trade and investment concessions not yet available to many other countries,
if any, are open and accessible to the millions of small, medium and large businesses in Australia, opening a
market of 1.36 billion people–a huge number, a huge market opportunity.

With the digital economy, with the connectivity that exists now, even compared with 15 or 20 years ago, there
is an opportunity now for not just our large businesses to take advantage of these concessions but for our small
and medium businesses to be in there and establish themselves, even with a very small presence, to make an
investment themselves in China and to develop a market not within 23 million people but within 1.36 billion
people–a wonderful opportunity.

For our part Australia is an important trade partner for China. What surprises many people is that we are China's
sixth largest source of imports and 14th largest export market. So a country of 23 million people is the sixth
largest source of imports and the 14th largest export market for China.

ChAFTA provides better access to our respective markets. For example, ChAFTA will remove significant
barriers to Australian agricultural exports to China across a wide range of products including beef, dairy, lamb,
wine, hides and skins, horticulture, barley and seafood, and much more.

Under ChAFTA, China will remove tariffs on 99.9 per cent of Australia's resources, energy and manufacturing
exports, worth more than $80 billion, or 30 per cent of Australia's total merchandise exports in 2014.

ChAFTA will restore Australia's exporters' competitive position against producers from countries that already
have free trade agreements with China–in other words, this deal is as good as any other deal that China has done
with anyone and better than most deals done with any other country–as well as advance Australia's commercial
interest in a range of new and existing sectors. In turn, the free trade agreement gives the growing numbers of
Chinese middle-class consumers better access to Australia's safe, high-quality agricultural produce.

And you can see it happening. Two years ago, we sold 60,000 tonnes of meat to China. Last year, we sold 260,000
tonnes of meat to China. China went from our 12th biggest market to our third biggest market in one year. This is
happening now. This phenomenon is taking place now. It is not for decades in the future. We have got to grasp it
while we can, as a country, and ChAFTA really, in many respects, is going to give us the first-mover advantage
in many of these areas, especially in services.

ChAFTA will restore Australian exporters' competitive position, as I said. ChAFTA also means reduced import
costs for Australian businesses and consumers alike. Australia will remove its remaining tariffs on Chinese goods
within four years, and most of it will be removed on entry into force. This means Australian consumers and
industries that rely on imported Chinese products are set to benefit.

The fact is that, 25 years ago, 20 per cent of all goods and services exported from anywhere around the world
ended up as an input into another good or service–20 per cent. Today, just 25 years later, 73 per cent of all goods
and services exported from anywhere in the world end up as an intermediate good, so 73 per cent of what we
buy from China, on average, will be an input into one of our goods and services. It is very important because it
means that we no longer look at exports in one way and imports in another, because the reduction of protection is
important at both ends. So, again, this free trade agreement, removing a lot of our own protection against certain
products, is giving much cheaper inputs for many, many producers of those products.

For Australia, ChAFTA is the third major trade agreement concluded by this government since coming to office.
Independent modelling that has been conducted provides an indication of the significant, combined economic
benefits that this powerful trifecta of agreements will deliver for Australia in the years ahead.

For example, between 2016 and 2035, our GDP is projected to be $24 billion larger in today's dollars. There are
also those things that cannot be modelled such as substantial increases in investments that will inevitably flow
from deeper trade relations and increased investor confidence. That has not been factored into this agreement.
We have assumed no increase in investments, yet we look at what happened with the US free trade agreement.
Within 10 years, two-way investment went from $653 billion to $1.3 trillion, and that is the effect of opening
up investment opportunities.

The linkages that flow from the 140,000 Chinese students studying in Australia today, or the 800,000 Chinese
tourists visiting Australia each year, builds mutual understanding and trust. Of course we also have one million
Australian citizens who speak Mandarin in the home. In other words, we have 20 per cent of our population
who are also enormously powerful linkages into China and a hugely powerful form of introduction to Chinese
customs and character that is beneficial to our country. All of these linkages build mutual understanding and
they build trust, which are key elements of future peace and prosperity. As trust and relationships grow, with
agreements such as ChAFTA, intangible benefits emerge.

For example, in January this year–following the conclusion of ChAFTA–a landmark air services deal was
struck between Australia and China that will see a tripling of aviation capacity between our two countries, from
22½ thousand seats per week to 67,000 seats per week by the end of 2016. We–both sides of politics–had been
trying for four years to get to the table and have a negotiation. In a matter of three weeks after we had finished
this deal, the doors opened; we were there; and the deal was done in about a quarter of the time that was expected.

For our part, today–again as a similar opportunity that emerges outside, really, the construct of the free trade
agreement–I can announce, on behalf of my friend and colleague the Minister for Immigration, Peter Dutton,
that the number of years applying to multiple entry tourist visas for Chinese citizens visiting Australia will
increase from three years to 10 years. We will increase the multiple entry tourist visa for Chinese visitors visiting
Australia from three years to 10 years.

This will provide an enormous boost, I think, to our tourism but it will also provide a very significant boost to
their comfort in coming to Australia. It is also a sign of how we measure China and the trust that is growing
between our countries in a very significant way.

Over the next two years, the Australian government is rolling out the North Asia free trade agreement information
seminar series to all Australian capital cities and rural and regional centres, to help explain and encourage takeup
of the opportunities the free trade agreements open for Australian businesses.

In tabling ChAFTA, I acknowledge the contribution made by my predecessors on both sides of the House.
Negotiations commenced in 2005 during the Howard government, when Mark Vaile was the Minister for Trade.
Mark was followed by Warren Truss, Simon Crean, Craig Emerson and Richard Marles; all share in the watershed
outcomes of this agreement.

Pleasingly, this demonstrates bipartisan support across successive Australian governments for our relationship
with China.

I would also like to acknowledge all of those officials and negotiators from my department who have dedicated
so much time, effort and professionalism over a long period to help secure this outcome. After 10 years it is
rather a large alumnus.

This includes Jan Adams and her excellent team. It includes our ambassador, Frances Adamson, and her
predecessors. I would also like to thank my own staff for their efforts and support.

As with all proposed treaties, the Australian Parliament's Joint Standing Committee on Treaties will now review
the text of the agreement and, in due course, provide its report. The Senate Foreign Affairs, Defence and Trade
References Committee will conduct a separate review.

Tabling today follows the legal scrub and translation of the text, and I encourage business to prepare for its future
entry into force, which I hope will occur later this year after passage of implementing legislation.

I commend this agreement to the parliament and hereby table the China-Australia Free Trade Agreement with
its national interest analysis.

Last Updated: 29 July 2015
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