Australia and China agree to landmark free trade agreement

Australia and China agree to landmark free trade agreement

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Australia and China_Tony Abbott and XI Jinping

Game-changing FTA to be signed between Australia and China in 2015.

Australia and China will sign an agreed upon landmark free trade agreement (FTA) by 2015 that will facilitate large-scale Chinese investments in Australia by doing away with existing trade barriers, while enhancing sales of resources and agricultural produce from the country. The Chinese premier, Xi Jinping, met with the Australian prime minister Tony Abbott, as part of a state visit to Australia after attending the G20 summit in Brisbane on November 17, 2014.

Australia and China_Tony Abbott and XI Jinping

The decade long deal will remove tariff for about 85 per cent of Australian exports that will make their way into China initially, changing it to 93 per cent in the first four years, and then to 95 per cent within the span of the agreement. Similarly, most Australian tariffs on Chinese goods will also be dropped within four years.

The two-way trade between the two nations is valued at $131 billion annually and is expected to experience an increase as tariffs reduce or are done with. Currently, China is Australia’s biggest trading partner, particularly when it comes to importing minerals and food.

As part of the FTA, it has also been decided that Chinese private-sector investments in Australia will only be scrutinized if their worth touches A$1.1 billion or beyond, as compared to the current limit of A$248 million. Since the Foreign Investment Review Board conducts these reviews with respect to national interest, the change will not apply to investments made by state-owned organizations.

Australia has experienced a fourfold increase in its trade in the last 10 years. With this FTA, The country’s trade will receive a massive exports boost, which will be beneficial both for consumers, as well as for employment.

Photo Credits: abcnews.go.com