With the object of boosting the economy through increased trade and investment, Australia has continued to develop its network of free trade agreements through 2022, and has significant plans for 2023, bringing more opportunities for business.
The Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA)
Leaders of the Association of Southeast Asian Nations (ASEAN), Australia and New Zealand recently announced the substantial conclusion of negotiations to update the AANZFTA. While specific details of the upgrade have not yet been released, as negotiations are in-part ongoing, the Australian Minister for Trade and Tourism has announced that the upgrade aims to:
- accelerate supply chain integration and resilience;
- ensure the smooth flow of essential goods during periods of crises;
- deepen services and investment liberalisation; and
- support electronic commerce and digital transformation.
Provisions on electronic commerce, competition, customs procedures and trade facilitation, trade in goods, rules of origin, trade in services and investment will also be updated. It is expected that the Second Protocol to Amend AANZFTA will be signed in 2023. Watch this space.
Regional Comprehensive Economic Partnership Agreement (RCEP)
The RCEP is a regional free trade agreement which builds upon Australia’s existing agreements with 14 other Indo-Pacific countries. It entered into force on 1 January 2022 and will be the world’s largest free trade agreement by members’ GDP when successfully ratified by all parties.
The RCEP delivers greater integration of value chains, more common rules of origin for businesses trading with multiple RCEP parties, locks in market access, addresses non-tariff barriers and improves on positions in existing free trade agreements.
Australia-India Economic Cooperation and Trade Agreement (AI-ECTA)
After more than a decade of negotiations, the AI-ECTA was signed in April this year. The Australian Government has been working through the processes necessary to implement the agreement, and legislation to this effect successfully passed Parliament in late November. India has also completed its domestic process to ratify the AI-ECTA. The AI-ECTA will enter into force on 29 December 2022.
India presents a number of opportunities, particularly for Australian exporters, as the world’s fastest growing large economy. Australia’s aim is for India to become one of its top three export markets by 2035 and to similarly increase India-bound Australian investment. AI-ECTA will eliminate tariffs on 85% of Australian exports and progressively reduce tariffs on a further 5%. This will save Australian exporters around $2 billion per year. Consumers and business are set to save around $500 million per year in tariffs on imports. Improved mobility for professionals and access to the Indian market for Australian companies are among the other upshots.
AI-ECTA is an interim agreement and negotiations are in progress for a full free trade agreement between these parties.
Australia-United Kingdom Free Trade Agreement (A-UK FTA)
The A-UK FTA was signed on 17 December 2021 and will enter into force 30 days (or any other mutually agreed period) after both Australia and the UK confirm in writing that they have completed their respective domestic requirements. In a step towards this, the Australian Parliament passed the required legislation to implement the agreement in late November this year. The UK Government is still in the process of enacting enabling legislation required as part of its own ratification process. The Australian Minister for Trade and Tourism has recently announced he will encourage the UK to finalise their domestic requirements so that the A-UK FTA can enter into force in early 2023.
The A-UK FTA will eliminate tariffs on over 99% of Australian goods exported to the UK and reduce other trade barriers. It will regulate digital trade, make it easier for Australian companies and individuals to operate in the UK market and raise the investment screening threshold to match that given to other key Australian investment partners with whom Australia has a free trade agreement.