China-Australia Free Trade Agreement: Future opportunities
June 28 2018
The Australia-China Relations Institute (ACRI) at the University of Technology Sydney (UTS) welcomed Trade Minister Steven Ciobo MP to deliver an address in the Theatre, Parliament House, Canberra on June 28 2018.
In 2015, the China-Australia Free Trade Agreement (ChAFTA) was described as a state-of-the-art FTA. Beneficiaries included banks, insurers, securities companies, law firms, professional services suppliers and education services exporters, as well as health and aged care.
Minister Ciobo provided an update on how ChAFTA has benefited the Australian economy in 2018 and where negotiations over the review mechanism could lead.
The Minister also participated in a Q&A session with the audience chaired by Professor James Laurenceson, ACRI Deputy Director.
The text of the Minister's speech is available below.
Time: 10:00 am - 11:30 am
UTS Australia-China Relations Institute event
The Hon Steven Ciobo MP
Speech, check against delivery
Theatre, Parliament House, Canberra
June 28 2018
I thank the Australia-China Relations Institute [ACRI] and the University of Technology Sydney [UTS] for their initiative in bringing us all here together today – a real pleasure to see so many faces keen to participate in this conversation.
At the outset I want to acknowledge of some of the unsung heroes who delivered the agreement we will discuss today.
Trade agreements do not negotiate themselves.
ChAFTA was the result of 21 rounds of tough and difficult negotiations over nearly a decade involving hundreds of officials from both countries.
In Australia, it involved hundreds of formal submissions and more than 700 direct consultations with stakeholders.
So I want to formally thank officials from both sides for their effort, their endurance and the high quality of the result of their endeavours.
And of course I pay a special tribute to the outstanding contribution of my predecessor, Andrew Robb.
In bringing the deal home Andrew overcame the obstacles and naysayers to achieve a historic outcome – he was able to negotiate the most liberalising free trade agreement China has delivered to date.
It’s a high quality deal and our exporters – small, medium and large – have responded.
Two and a half years since the deal was signed, it is an ideal time to take stock of the dividend that ChAFTA has delivered for both countries.
I am pleased to report that our two way trade with China is at record levels – two way trade reaching $183 billion in 2017.
Our goods exports to China grew by 22 per cent last year.
Our exports of wine, milk powder and skin care products more than doubled.
Our nickel exports quadrupled.
And our exports of lobster, and table grapes grew eight-fold.
We now export more to China every 6 weeks than we do to the United Kingdom in a year.
Our trade with China is more diverse than ever.
Our service exports to China are now greater than those to the United States and the United Kingdom combined.
China has become the largest single export market for a range of Australia's manufactured food items.
Our trade with China is more open than ever – 98.5 per cent of Australian goods enter China duty free or under preferential rates.
It is not just the trade numbers that are strong.
The people to people relationship could hardly be stronger.
185,000 Chinese students studied in Australia in 2017.
1.4 million Chinese visited Australia in the year to March.
That looks to me like a relationship that is flourishing.
The key ingredient to the success of the relationship is that both sides benefit from this economic relationship.
China’s goods exports to Australia have grown 13-fold since 2000.
And Australia provides a reliable supply of high-quality agricultural and mineral products and a source of highly competitive services (healthcare, education) to China.
As well as a stable location for China’s investment.
That investment relationship has grown strongly in both directions in recent years.
Chinese investment in Australia has grown from negligible levels 10 years ago to reach $40.7 billion in FDI at the end of 2017.
Australia’s investment in China is also growing strongly.
An example of this growth is the commitment to China made by architectural and consulting firm Woods Bagot.
The Chinese market has been a staple of their business for many years.
Founded in Australia, the firm’s history spans more than 120 years, since 1896, to what are now some of the oldest features of the Adelaide skyline.
Already established in the Chinese market, ChAFTA nonetheless has brought renewed advantages to Woods Bagot – promoting Australian industry standards, reducing red tape barriers, and allowing for deeper collaboration across borders.
Just this month, Woods Bagot have announced that they have received local approvals for a ten-year project in Zhuhai, China – the transformation of an old, unused sugar factory to repurpose as a cultural park in celebration of the region’s heritage.
I also note that the recent Westpac Australia-China Business Sentiment reported that 83 per cent of businesses reported a positive outlook for their China operations over the next five years.
The bottom line is that ChAFTA is delivering results for both economies and provides the foundation for future growth.
This growth is consistent with the vision articulated by Chinese leader Xi Xingping at Davos last year when he said that “in the face of both opportunities and challenges of economic globalization, the right thing to do is to seize every opportunity, jointly meet challenges and chart the right course for economic globalization.”
That is exactly what our two countries have achieved with ChAFTA.
ChAFTA has created an environment that enables both Australian and Chinese companies to make commercial decisions – in the interests of their own profit margins, in the interest of the jobs that they provide, and in the interest of a strengthened bilateral economic relationship.
That is the dictionary definition of a “win-win.”
These days, when you travel around China, you can spot Australian products just about everywhere.
The Chinese supermarket chain April Gourmet has seen a jump in demand when it comes to Australian products.
In their stores in Beijing, you can see shelves of familiar packaging – boxes of Carman’s muesli bars, tubs of Farmer’s Union yoghurt, jars of Mayver’s crunchy peanut butter.
Products like beef, regional honey, cheese, biscuits and bottles of wine that I’m sure we would all recognise.
This is what ChAFTA looks like in real life.
For citrus farmer Robert Hoddle, Director, Gunnible Pastoral Company, it has been a life changer.
His family orchard sits an hour out of Tamworth – near the town of Gunnedah, in country New South Wales.
For 12 years, Robert had been producing Salustiana oranges for both domestic and overseas markets – but it was only after ChAFTA entered into force that he began to export into China.
In just over a year, Robert’s orchard was overwhelmed with demand – tripling its orange exports from 100 to 300 tonnes.
So what was it that led Robert to the Chinese market, and to the sudden boom in his business?
Simple – before ChAFTA, Australian citrus exports to China faced a tariff of 11 per cent.
Under ChAFTA, that tariff has reduced to 6.1 per cent – increasing demand from the Chinese market, and increasing profit flows into Robert’s business.
In fact, there is a further tariff reduction to take effect on 1 January 2019 – and by 2023, that tariff will have been completely eliminated.
Along with these reductions, ChAFTA has also made it easier for Robert to understand the process for sending his goods to China – clarifying export regulations and reducing red tape.
This has breathed in new life, back in Gunnedah and in dozens of orchards across the country.
In fact, Australian exports of oranges to China have grown by 137 per cent since ChAFTA came into force.
Robert has benefitted from Australia’s natural advantages over other major citrus producing countries – Australia is closer to China, and can deliver shipments much faster.
Being in different hemispheres, Australia is counter-seasonal to China.
What we produce seasonally here is the opposite to what Chinese growers and our other northern hemisphere competitors can produce at the same time.
What is more, Australia has built a reputation in China for delivering quality produce, a gift of our beautiful environment and our clean air.
The Chinese market is growing each year – but it isn’t just citrus exports reaping rewards.
Services providers are also seeing pathways into the Chinese market – banks and insurance providers, law firms, providers of education, health care, aged care.
Commitments on these services sectors, under ChAFTA, provide better market access and increased certainty for Australian providers – but we need to make sure that Australians know how to take advantage of these changes.
We want to work towards a position where every Australian business can benefit from the opportunities that we have created.
This is an absolutely critical responsibility, as far as I’m concerned.
We are focused as well on explaining the mechanisms of our existing free trade agreements for the benefit of small and medium enterprises.
You may be familiar with the interactive online FTA Portal launched recently by my Department in 2016 – information on all our FTAs, readily available to any business owner with an internet connection.
Add to that the face-to-face communication initiatives – FTA information seminars – conducted not only by my Department and by Austrade, but also by key industry partners.
In April, I personally delivered the 100th such FTA information seminar over on the Gold Coast.
It’s a symbol of the Government’s commitment; making sure that each and every Australian exporter knows the FTAs are for them.
The lasting value of ChAFTA will depend squarely on how easily its opportunities can be accessed by the average Australian.
While ChAFTA negotiations were long and hard I am thrilled with what our two nations have achieved.
Yet no free trade agreement is a set-and-forget exercise.
ChAFTA captured our two nations’ interests and priorities at a particular point in time – but it is a living agreement, and it is my job to make sure that its terms remain relevant today.
ChAFTA includes a number of built-in review mechanisms to ensure the Agreement keeps building on its outcomes and delivering improved market access for our respective countries.
Reviews of ChAFTA’s services and investment chapters have already started.
Our approach is built on the stories we hear from Australian businesses and investors – their successes as well as the challenges they continue to face.
These reviews are a step in better understanding and responding to ChAFTA and its lived experience.
Once concluded, I expect to move quickly into negotiations with China to update and improve these chapters – and there, I have two priorities.
Number one: to make sure that we are creating new opportunities in sectors of priority interest for Australian services suppliers.
Number two: to make sure that we create the conditions for increased investment flows to both of our economies.
It’s important we make sure that both our nations continue to develop the absolute best agreement possible.
ChAFTA also mandates a broader general review – something both Australia and China have committed to undertaking by the end of this year.
The general review will provide us with an opportunity to consider other aspects of the Agreement.
It won’t be the last time we see ChAFTA grow and evolve – both sides have committed to a general review every five years.
Another key issue on our agenda is the Belt and Road Initiative (BRI) – we welcome projects that have the potential to make a positive contribution to Asia’s growing infrastructure needs.
We support involvement in BRI projects on a case-by-case basis on commercial merit and where there is a clear trade or investment opportunity for Australian businesses.
As you know, I will lead an Australian business delegation to the BRI-focused China International Import Expo (CIIE) in Shanghai in November 2018.
The CIIE will provide Australian exporters with an opportunity to network with over 150,000 Chinese importers and an Australian Government sponsored National Pavilion will support key Australian industry bodies in showcasing their capabilities.
I am certain that Australia’s participation in China’s signature CIIE event will help to create additional positive momentum for our bilateral trade and investment relationship.
At a time when global trade is marked by uncertainty, it is particularly important to rely on strength and stability in our trading relationships.
Opening new and further export opportunities for Australian businesses is one of the core objectives of the Turnbull Government. We know liberalised trade and investment drives economic growth and drives job growth in Australia.
The most recent national accounts have further reinforced the fundamental truth of this statement. Over the past five years, export growth has been responsible for driving a full third of Australia’s GDP growth. And in the context of creating business conditions conducive for more than one million Australians to secure a job, it’s clear the Coalition’s new free trade agreements have been a key driver.
I’ve already spoken to two examples of Australian businesses who are growing because of deals exactly like CHAFTA. There are so many more.
These experiences galvanise the Government’s commitment to liberalising trade and investment. I acknowledge, however, this commitment is juxtaposed against an increasingly troubled global trade and investment landscape.
Bold moves by the United States to address the President’s concern over the US goods trade deficit, including tariffs, quotas, and investment restrictions, are triggering retaliatory action by a number of major markets such as the European Union, Canada, Mexico, and China.
I stand firm on Australia’s behalf as a contrary voice. I note, importantly, not a lone voice. The resilience and commitment of the eleven nations that recently concluded the TPP-11 attests to that.
President Xi’s repeated desire to continue opening China to trade and investment is an ambition Australia and China can continue to achieve together. CHAFTA has withstood the uninformed criticisms and withstood the deliberate mischief from multiple quarters. We are now poised to build on this success by broadening CHAFTA with even more opportunity for both Australia and China.
There will be discordant voices, and certainly Australia and China do not see eye to eye on all aspects of our world view, however these differences do not, and should not, affect our ability to grow co-operation, dialogue, and people to people links.
Australia and China both know strong trade and investment bonds promote prosperity, peace and stability. We can both reinforce this knowledge by demonstrating through CHAFTA our common objective.
ChAFTA is by no means a panacea for every trade issue.
Ladies and gentlemen, I am not suggesting that there are no issues in our bilateral relationship.
I can think of no trading partner with whom we do not have differences of opinion on occasions.
But ChAFTA puts enormous ballast in our bilateral relationship.
It provides a range of mechanisms for talking to China about trade – and this can only be a good thing.
We are still in the early years, but rest assured I will keep working hard for ChAFTA, I will keep working hard for the free trade agenda, and I will keep working hard for Australians.
Whatever the future opportunities might be, we must make sure that we are well equipped to make the most of them. Thank you.
The Hon Steven Ciobo MP
The Hon Steven Ciobo MP is Australia’s Minister for Trade, Tourism and Investment.
A member of the Australian Cabinet, he is responsible for four government agencies in a portfolio that employs more than 7,000 officials and has a combined annual budget exceeding AUD 6 billion.
Minister Ciobo is pursuing the most ambitious trade agenda in Australia’s history. Since becoming Trade Minister in February 2016 he has concluded four trade agreements covering 19 countries. The trade agreements concluded, or currently being negotiated, by Minister Ciobo cover economies that account for more than 61 percent of the world’s GDP. Minister Ciobo is developing a Single Window for International Trade to put technology and business at the heart of making exporting easier. And, together with his Japanese and Singaporean counterparts, he is leading work on a plurilateral agreement on digital trade with more than 80 members of the World Trade Organisation.
As Investment Minister, Minister Ciobo engages with the international investment community to promote and facilitate foreign investment into Australia. Since his appointment, the total stock of foreign investment has risen by more than $233 billion. In his previous role as Parliamentary Secretary to the Treasurer Minister Ciobo assessed more than 800 applications for business investment under Australia’s foreign investment framework.
Minister Ciobo has delivered record revenue for Tourism Australia, allowing the agency to promote Australia overseas like never before. The Australian tourism industry is welcoming a record number of tourists who are staying longer and spending more. In 2018 he introduced the Boosting Business Events Bid Fund to target one of the highest yielding segment of the tourism sector.
This is Minister Ciobo’s fourth front bench role. He also served as a Shadow Minister in the Nelson, Turnbull and Abbott Oppositions. Minister Ciobo has previously served as Australia’s Alternate Governor to the World Bank, the Asian Development Bank and the European Bank for Reconstruction and Development.
Before entering the Australian Parliament as the Federal Member for Moncrieff in 2001 Minister Ciobo built a professional career as an executive in the economic reform unit at international firms Coopers & Lybrand and, later, PricewaterhouseCoopers. He holds a Bachelor of Commerce and a Bachelor of Laws from Bond University, as well as a Master of Laws from the Queensland University of Technology.
Minister Ciobo is married with two children.