World Economy

China, Australia to Formalize FTA

China, Australia to Formalize FTAChina, Australia to Formalize FTA

China and Australia will sign a long-awaited free-trade agreement on June 17, as the nations look to boost their already strong trade relationship.

Australia’s Trade Minister Andrew Robb and China’s Commerce Minister Gao Hucheng will formalize the so-called China-Australia Free Trade Agreement in Canberra on June 17, AAP reported.

“The landmark agreement will lock in our existing trade relationship with our largest trading partner, and will be a catalyst for future growth across goods, services and investment,” Robb told the news agency.

The agreement will initially allow 85% of all Australian exports to enter China tariff-free. Subsequently, the quota will be increased to 93% within four years and 95% when the agreement is in full force. The agreement would also enable China to export products to Australia tariff-free.

Resource-rich Australia has been a natural trade partner for China, where economic growth averaged 10% over the last three decades. The countries accounted for more than $160 billion of two-way trade in goods and services in 2014.

China is Australia’s largest export market for both goods and services, accounting for nearly a third of total exports, and a growing source of foreign investment. The FTA is expected to promote further Australian investment in China and Chinese investment in Australia.

Australia’s similar agreements with Japan and South Korea would soon make 95% of the country’s exports tariff-free, according to Prime Minister Tony Abbott.

“This is what happens when you’ve got a government which is open for business, when you’ve got a government with a plan, a plan to deliver a safe, strong and prosperous future for everyone,” he told the Australian parliament.

According to the Global Times, the ChAFTA was signed only after 10 years of negotiations, which started in April 2005. The declaration of intent, symbolizing the conclusion of ChAFTA negotiations, was signed in Nov. 2014 during President Xi Jinping’s visit to Australia following the G20 summit.