What is the China–Australia Free Trade Agreement?
The China – Australia Free Trade Agreement (ChAFTA) is a bilateral Free Trade Agreement (FTA) between the governments of Australia and China. The free trade agreement was signed between Australia and China on 17 June 2015. The treaty follows the usual agreement making process, and it will come into force when China concludes its domestic legal and governmental processes and, when Australian Parliament’s Joint Standing Committee on Treaties and the Senate Foreign Affairs, Defence and Trade References Committee finish its review. The agreement will enter into force on 20 December 2015.
What does it mean?
Many goods imported from China will receive a reduction in payable Duty, at the time of institution many imported goods will be free of duty, and other goods will have phasing duty rates instead. The phasing duty rates will subsequently reduce to free over the next 3 or 5 years.
How does it work?
For merchandises to qualify for preference they will need to meet the relevant rules of origin.
WO (Wholly Obtained) this rule necessitates that the merchandises solely originate in China. This clause covers agricultural products grown in China, live animals born and raised in China, and minerals extracted in China.
WP (Wholly Produced) this rule necessitates that merchandises are made only from materials that originate in Australia or China. This clause covers products manufactured from Solely Acquired materials.
PSR (Product Specific Rules) This regulation relates to merchandises manufactured in China that contain materials that have been imported into China and also requires that the exported products meet the specific rules that apply to the exported product. These guidelines can be Wholly Obtained.
CTC (Change of Tariff Classification) and this requires that imported materials undergo a process of manufacture that results in a change in classification of those goods.
RVC (Regional Value Content) this necessitates that the exported products have a minimum percentage of value added from within China.
Specific Process of Production, this rule necessitates that non-originating resources undergo a specific processing operation within China.
What do you need to do?
Contact your supplier or buyer as soon as possible. You maybe required to obtain a certification of origin or declaration. It is always best to be prepared a few weeks earlier prior to any dealings with your supplier or buyer.
The full text of the ChAFTA agreement as well as helpful FTA information and factsheets are available on the Department of Foreign Affairs and Trade website. For specific questions on the agreement, email ChinaFTA@dfat.gov.au or phone DFAT on 02 6261 1111.