China-Australia sign major free trade agreement

China and Australia have entered into a free trade agreement (ChAFTA) that will offer Australian dairy farmers, winemakers and other sectors improved access to Chinese markets.

While the agreement will be signed in 2015 after the draft is translated and legally reviewed, by Australia Trade and Investment Minister Andrew Robb and Chinese Commerce Minister Gao Hucheng have signed a declaration of intent in the presence of Australian Prime Minister Tony Abbott and Chinese President Xi Jinping at Parliament House in Canberra.

Trade between the two countries has reportedly grown substantially over the past few decades. According to the Australian Department of Foreign Affairs and Trade, China is considered to be Australia’s largest two-way trading partner.

Last year, trade between the two countries was estimated to be around $130.78bn (A$150bn).

While the complete details of the deal are yet to be released, the Australian Government has said that there was a possibility that the agreement would add $17.4bn (A$20bn) to that figure.

Robb said in a statement: "Building on trade deals already concluded with Korea and Japan, ChAFTA forms part of a powerful trifecta of agreements with Australia’s three largest export markets that account for more than 61% of our exports of goods.

"More than 85% of Australian goods exports will be tariff-free upon entry into force, rising to 93% in four years. Some of these goods are currently subject to tariffs of up to 40%."

As a part of the agreement, tariffs for Australia’s $13bn dairy industry will be abolished. The abolition of tariffs ranging from 12%-25% will also help Australia’s beef and sheep farmers. Apart from this, all tariffs on Australian horticulture will be eliminated.

The BBC reported that about 85% of Australian exports into China will be exempted from tariffs, including dairy, beef, leather, mineral commodities and horticulture. With the full implementation of the deal, this percentage is set to increase to 95%.

However, reduction in tariffs on key commodities such as rice, wheat, cotton and sugar is not a part of the deal.

Chinese side is also expected to gain from the deal as its exports to Australia such as clothes, shoes, vehicles and electronics will be tariff-free.

Xi Jinping is currently on a state visit to Australia following the G20 summit.