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How to make the most of Australia’s trade deal with China

How to make the most of Australia’s trade deal with China

The China-Australia Free Trade Agreement (ChAFTA) will lock in existing trade with our largest trading partner and create opportunities across a number of areas, including goods, services and investment. But what’s in it for small business owners, and can they position themselves to take advantage of the landmark deal?

What is ChAFTA and what does it mean for you?

The deal between China and Australia was 10 years in the making and will ultimately make trade between the two countries easier. Both countries have signed a declaration of intent and will endeavour to bring the agreement into force.

ChAFTA will remove tariffs on almost all Australian resources and energy products, but also on goods manufactured in Australia, including pharmaceutical products.

According to University of New South Wales economics professor Tim Harcourt, SMBs are set to benefit from the deal. There are currently around 5600 Australian SMBs doing business directly with China. Another 4800 trade with China through Hong Kong and 3000 already have a physical presence in China.

But this deal could see many more opportunities open up and there are a number of agreements that could help SMBs in a variety of sectors, particularly health and tourism.

Building relationships in construction

China has agreed that it will provide new market access to Australian companies undertaking joint construction projects with Chinese counterparts in Shanghai. As part of this, Australian companies will be exempt from business-scope restrictions, allowing them to undertake a wider range of projects.

Taking advantage of tourism

China has also guaranteed that Australian service providers will be given the green light to construct and operate hotels and restaurants in China. Travel agencies and tour operators will be able to establish wholly Australian-owned subsidiaries in China for tours within the country for both domestic and foreign travellers.

Offering services from software to speech

Australian providers have scored a win, with new Chinese commitments allowing them to offer a range of services in a number of sectors, including:

  • Building and cleaning services.
  • Environmental services.
  • Packaged material printing.
  • Research and development.
  • Real estate.
  • Services incidental to manufacturing.
  • Software implementation.
  • Translation and interpretation services.

Changes to tariffs could also benefit the domestic beer, dairy and horticultural industries.

How can SMBs take advantage of ChAFTA?

Here are some steps to help you investigate whether there is room to grow your business via ChAFTA.

  1. Be wary of complexity: FTAs can be very complex and offer a large range of potential opportunities for goods and services trade and investment. They must reflect the legislation and procedures between the partner countries, so it may be a good idea to seek advice on the legalities surrounding ChAFTA.
  2. Apply for certification: If you are an Australian producer, take steps to demonstrate that your products are eligible for FTA benefits.
  3. Investigate pricing opportunities: Goods that you import from China may get cheaper as a result of ChAFTA. Find out if any price reductions may help your business.
  4. Get ready to travel: Take advantage of any FTA provisions that improve business mobility as SMBs could benefit from sending workers temporarily overseas or taking on overseas workers.
  5. Get professional advice: Before you embark on an investment or trade strategy, seek advice from organisations such as Austrade or The Department of Foreign Affairs and Trade, or consult legal and tax specialists in foreign trade.

Despite reservations about ChAFTA targeting big business, it’s clear that the agreement will offer many benefits to Australian SMBs. With some research and patience, you could find valuable ways for the agreement to help you expand and grow your business.

Given the opportunities of ChAFTA, now is a good time to learn how to navigate import/export regulations.

Alice Uribe is a journalist who has worked at The Australian, ninemsn, Financial Standard and ifa. She has covered Australia’s financial services space for almost 10 years, and has written about superannuation, investment and financial advice for many trade and mainstream press outlets.

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