Australia currently has eighteen (18) Free Trade Agreements (FTA’s). These range from bi-lateral Agreements such as the China-Australia (ChAFTA) Free Trade Agreement, to multi-lateral Agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Free Trade Agreements are complex by nature and adding some confusion is the fact several countries are included in multiple Agreements. All FTAs are different and determining which FTA provides the best outcome for you can be difficult.
FTA’s aim is to reduce or eliminate barriers to trade, such as tariffs, quotas and import restrictions, thereby incentivising trade by making it easier and more cost-effective for businesses to export and import.
FTA’s provide better access to international markets, a competitive edge for exports, and increased opportunities in two-way investment. They also help reduce import costs for Australian consumers and businesses fostering a more dynamic and interconnected economy.
At present, Australia is in negotiations with the European Union and the United Arab Emirates. Australia is also in negotiations with India to further enhance the existing India Free Trade Agreement.
The FTA with the EU is of obvious interest and most analysts are suggesting the earliest we could see some movement here would be late 2025.
Impact of US Tariffs on Chinese Imports
The global economic market is so interconnected, we need to understand the impact on the Australian economy based on what occurs overseas. i.e., cause and effect.
The United States (USA) recently increased tariffs on a range of Chinese imports targeting strategic sectors, particularly steel, semiconductors, and electric vehicles.
This move is part of a broader strategy to reshore manufacturing and enhance supply chain resilience in the USA.
However, these tariffs have significant ripple effects on global trade particularly impacting Australia and South-East Asia.
With the US imposing higher tariffs, China has been off-loading surplus goods to other markets – Australia and Southeast Asia. The influx of Chinese goods can lead to increased competition for local manufacturers. As a result, Indonesia has also increased tariffs on Chinese imports to combat these effects.
The redirecting of these goods by China, does not necessarily mean China is ‘dumping’ goods, as ‘dumping’ is a specific illegal trade practice.
For countries that are heavily reliant on Chinese trade, like Australia, Japan, Indonesia, and South Korea, there will be challenges due to the shifting trade dynamics and navigating these challenges will be crucial for maintaining economic stability and growth in the region.
Please reach out to one of our team if you’d like to discuss any of the topics in this trade snapshot, or other matters relating to international trade.
