Treaty tabled 17 June 2015 Submission 41. ACCI Submission: China-Australia FTA JSCOT. July ACCI ChAFTA JSCOT Submission July

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1 ACCI Submission: China-Australia FTA JSCOT July 2015 ACCI ChAFTA JSCOT Submission July

2 SUMMARY The Australian Chamber of Commerce and Industry (ACCI), leading the Australian business community, applauds the conclusion of the China-Australia Free Trade Agreement (ChAFTA). The treaty text reveals the negotiation of a high quality agreement, containing clear provisions that aim to enhance the substantial economic and trade relationship established between our countries. The entry into force of ChAFTA will also ensure that Australian goods exporters regain a competitive advantage over other countries that already have free trade agreements with China. We urge the speedy ratification of this agreement so that both parties can secure the best possible commercial positions.. Recommendation 1: ACCI recommends that the Australian Government ensure ChAFTA is ratified as soon as procedure allows, so that both parties might obtain the best possible schedule for tariff cuts. Recommendation 2: ACCI recommends that given the recent signing of the World Trade Organization (WTO) Trade Facilitation Agreement, Australia should ensure that ChAFTA and all subsequent trade treaties (inclusive of TPP and RCEP) are consistent with its principles, including accompanying WTO and World Customs Organization (WCO) instruments for harmonisation. ACCI ChAFTA JSCOT Submission July

3 The Australian Chamber of Commerce and Industry is the leading voice of business in Australia Canberra Office Melbourne Office COMMERCE HOUSE Level 3, 486 Albert Street Level 3, 24 Brisbane Avenue East Melbourne VIC 3002 Barton ACT 2600 PO BOX PO BOX 6005 Collins Street East Kingston ACT 2604 Melbourne VIC 8003 AUSTRALIA AUSTRALIA T: T: F: F: E: E: W: W: Australian Chamber of Commerce and Industry 2015 ABN This work is copyright. Reproduction is permitted, with direct attribution and notification to the Australian Chamber of Commerce and Industry. ACCI ChAFTA JSCOT Submission July

4 CONTENTS Summary 2 Contents 4 1. SUCCESSFUL REMOVAL OF TARIFF BARRIERS 5 2. INVESTMENT WINS 5 3. MOBILITY AND THE IFA 6 4. INVESTOR-STATE DISPUTE SETTLEMENT CLAUSE 6 5. SERVICE SECTOR SUCCESS 7 6. WTO TRADE FACILITATION AGREEMENT AND CHAFTA COMPLIANCE 7 7. ABOUT ACCI Who We Are What We Do 9 ACCI MEMBERS 11 ACCI ChAFTA JSCOT Submission July

5 1. SUCCESSFUL REMOVAL OF TARIFF BARRIERS ChAFTA removes a huge range of tariff barriers to the benefit of many Australian exports, particularly in the agriculture and food (or agri-food sector) sector. Thousands tariff lines will receive concessions that have been obtained by negotiators in ChAFTA, for the benefit of Australian business. Within 10 years of ChAFTA entering into force, tariffs on 95 per cent of Australian goods exported to China will be completely eliminated. We applaud this achievement. For example: Australian fruit, fresh vegetables, macadamia nuts, almonds, walnuts, pistachios and all other nut varietals will have tariffs completely eliminated within 4 years; Tariffs on chocolate, biscuits, jams and juice will be eliminated within 4 years Tariffs on beef imports will be eliminated within 9 years, and the current 12 per cent tariff on beef offal will be removed within 7 years; Sheep meat, similarly, will have tariffs eliminated within 8 years, and pork tariffs will be eliminated within 4 years; Tariff barriers for dairy products have also been negotiated to provide Australian dairy producers competitive advantage, with tariffs on infant formula, ice cream, and lactose eliminated within 4 years; Tariffs on wine, alcoholic spirts and beverages will be removed completely within 4 years; Select grains, seafood, live animals and processed food will also experience complete elimination of tariffs, almost all within the next 4 years. ACCI observes that a number of sectors will not receive specific benefits from the current agreement (including the sugar and rice industries) however we hope that these may be able to be covered in future agreement reviews. We strongly encourage the Government to pursue further and better concessions with China on behalf of these sectors. Recommendation 1: ACCI recommends that the Australian Government ensure ChAFTA is ratified as soon as procedure allows, so that both parties might obtain the best possible schedule for tariff cuts. 2. INVESTMENT WINS Foreign investment opportunities in Australia will be greatly increased under ChAFTA, and China has accordingly bound itself to improvements of conditions for Australian investors in China. The screening by Australia of prospective Chinese private investors in non-sensitive areas by the Foreign Investment Review Board ACCI ChAFTA JSCOT Submission July

6 (FIRB) will be lifted from $A248 million to $A1.078 billion. However, state-owned enterprises and agriculture will remain subject to FIRB approval. Under an Investment Facilitation Arrangement (IFA), Chinese-owned companies with investment projects valued over $A150 million will be able to negotiate increased labour flexibilities with Australia, if they are able to demonstrate a skills shortage to the Department of Immigration and Border Protection. We note the IFA operates within the limits of Australia s existing visa system. 3. MOBILITY AND THE IFA There is significant public debate around the implications of the ChAFTA side letter establishing the Investment Facilitation Arrangement (IFA). ACCI understands that the current requirement for skills assessment in about 30 trade occupations is at the discretion of the Australian Department of Immigration and Border Protection (DIBP) for all but 10 countries: Brazil, China (including Hong Kong and Macau), Fiji, India, Papua New Guinea, Philippines, South Africa, Thailand, Vietnam and Zimbabwe. We understand that all visa applicants from countries other than those listed are part of a non-compulsory category, but could still be required by DIBP to undertake a skills assessment where there is cause for concern, as opposed to relying on proof of qualifications, CV, experience and other evidence. The effect of the ChAFTA side letter is to effectively move China from the compulsory list into the discretionary list for 10 of the 30 occupations. This means that an assessment could still be required of a respective applicant, but it is not mandatory. For the other 20 occupations, China remains on the compulsory assessment list. 4. INVESTOR-STATE DISPUTE SETTLEMENT CLAUSE ACCI supports case by case inclusion of ISDS provisions in Australia s Preferential Trade Agreements. ACCI believes Investor-State Dispute Settlement (ISDS) support Australian investors in international markets. Such clauses have featured in many of Australia s previous bilateral investment treaties and preferential trade agreements for decades. ChAFTA contains ISDS clauses in Chapter 9. We note the inclusion of the following comprehensive carve-outs from their application to certain types of government decisions at Article 9.8(1): For the purposes of this Chapter nothing in this Agreement shall be construed to prevent a Party from adopting or enforcing measures: a. necessary to protect human, animal or plant life or health; b. necessary to ensure compliance with laws and regulations that are not inconsistent with this Agreement; c. imposed for the protection of national treasures of artistic, historic or archaeological value; or ACCI ChAFTA JSCOT Submission July

7 d. relating to the conservation of living or non-living exhaustible natural resources. We consider that this provides for an appropriate balance between the needs of investors and the national interest. 5. SERVICE SECTOR SUCCESS We highlight the success of negotiators in both parties in obtaining commitments on services from China in ChAFTA. Sectors standing to benefit under ChAFTA include construction, health and aged care, manufacturing, education, insurance, banking and finance, legal, and telecommunications. In the coming years this success will become increasingly valuable for Australian business, including the growing service industries. 6. WTO TRADE FACILITATION AGREEMENT AND CHAFTA COMPLIANCE ACCI applauds ChAFTA s compliance with international trade documentation standards, including its use of Certificates of Origin to make a claim for preference. This decision will allow exporters to use the same documents obtained under ChAFTA for international trade finance, and allow further use of these documents for subsequent trade of Australian goods moving beyond the free trade zone. By choosing an internationally harmonised system of trade documents in ChAFTA (Certificates of Origin), negotiators have removed red tape for exporters by coopting existing business practice and preventing needless duplication. A Certificate of Origin is a customary document of international trade in use worldwide, issued via government authority under the 1923 Geneva Convention Relating to the Simplification of Customs Formalities, to which Australia is a signatory, and also reflected in the Revised 2006 Kyoto Convention at Annex K. In modern trade the function of the document goes beyond mere origin, and provides importing Customs with a government-backed exporter statement for a range of determinations when the goods cross the border into the importing party. Determinations involve inter alia the implementation of anti-dumping procedures, tariff concessions, trade finance outcomes and assessing the value of the goods. As the importer has no legal standing to make claims about the foreign goods (and has a vested interest in making beneficial claims to its own Customs), the document represents a verified traceable set of data, which is scrutinised by the exporting government before being provided to the officials of the importing government. The ability of the exporting government to check, verify and adjudicate claims by its exporters on behalf of importing Customs is the trade facilitating aspect of the system made possible only on the basis of the exporting government s personality under international law. Since 1889 governments around the world have increasingly ACCI ChAFTA JSCOT Submission July

8 recognised that this administrative task should be outsourced to appropriate competent authorities in Australia, this is the Australian Industry Group (AiG) and the Australian Chamber of Commerce and Industry (ACCI). This system has also been co-opted for use in support of the trade finance industry through the International Standard Banking Practice (ISBP) guide for examination of documents under the Uniform Customs and Practice for Documentary Credits. The Australian Government has also mandated the use of ISO 17020:1998 standards in relation to ACCI and AiG s issuance of Certificates of Origin. This is an extremely costly but worthwhile standard of documentary issuance, which is mandatorily audited by the Joint Accreditation System of Australia and New Zealand (JAS- ANZ).This accreditation provides the necessary confidence in the third party issuing system so that preferential trading parties can accept the certification process related to conferring concessions under Preferential Trade Agreements. Certification according to the ISO/IEC Guide 2 is a procedure by which a third party gives written assurance that the product, process or service conforms to specified requirements. Both ACCI and AiG have maintained this standard and continue to meet the JAS-ANZ audits, and as a result Australia has a world-class system of issuance of these trade documents. We finally note that Australia has now ratified the WTO s 2013 Trade Facilitation Agreement. This agreement is supported by the 2006 Revised Kyoto Convention inclusive of Annex K and the UN Layout Key for Documents. Together they provide the standard frameworks for harmonising trade documentation. ACCI recommends that ChAFTA and all future trade negotiations (including TPP and RCEP) ensure compliance with these documents. Recommendation 2: ACCI recommends that given the recent signing of the World Trade Organization (WTO) Trade Facilitation Agreement, Australia should ensure that ChAFTA and all subsequent trade treaties (inclusive of TPP and RCEP) are consistent with its principles, including accompanying WTO and World Customs Organization (WCO) instruments for harmonisation. ACCI ChAFTA JSCOT Submission July

9 7. ABOUT ACCI 7.2 Who We Are The Australian Chamber of Commerce and Industry (ACCI) speaks on behalf of Australian business at a national and international level. Australia s largest and most representative business advocate, ACCI develops and advocates policies that are in the best interests of Australian business, economy and community. We achieve this through the collaborative action of our national member network which comprises: All eight state and territory chambers of commerce 29 national industry associations Bilateral and multilateral business organisations. In this way, ACCI provides leadership for more than 300,000 businesses which: Operate in all industry sectors Includes small, medium and large businesses Are located throughout metropolitan and regional Australia. 7.3 What We Do ACCI takes a leading role in advocating the views of Australian business to public policy decision makers and influencers including: Federal Government Ministers & Shadow Ministers Federal Parliamentarians Policy Advisors Commonwealth Public Servants Regulatory Authorities Federal Government Agencies. Our objective is to ensure that the voice of Australian businesses is heard, whether they are one of the top 100 Australian companies or a small sole trader. Our specific activities include: Representation and advocacy to Governments, parliaments, tribunals and policy makers both domestically and globally; Business representation on a range of statutory and business boards and committees; ACCI ChAFTA JSCOT Submission July

10 Representing business in national forums including the Fair Work Commission, Safe Work Australia and many other bodies associated with economics, taxation, sustainability, small business, superannuation, employment, education and training, migration, trade, workplace relations and work, health and safety; Representing business in international and global forums including the International Labour Organisation (ILO), International Organisation of Employers (IOE), International Chamber of Commerce (ICC), International Chamber of Commerce and Industry Australia (ICCA) Business and Industry Advisory Committee (BIAC) to the Organisation for Economic Co-operation and Development (OECD), Asia-Pacific Economic Cooperation (APEC) through the Australian ASEAN Business Council, Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI) and Confederation of Asia-Pacific Employers (CAPE) and Indian Ocean Rim Association (IORA) through the Indian Ocean Business Alliance (IORBA); Research and policy development on issues concerning Australian business; The publication of leading economic business surveys and other information products; and Providing forums for collective discussion amongst businesses on matters of economic and policy reform. ACCI ChAFTA JSCOT Submission July

11 ACCI MEMBERS ACCI CHAMBER MEMBERS: BUSINESS SA CANBERRA BUSINESS CHAMBER CHAMBER OF COMMERCE & INDUSTRY QUEENSLAND CHAMBER OF COMMERCE NORTHERN TERRITORY CHAMBER OF COMMERCE & INDUSTRY WESTERN AUSTRALIA NEW SOUTH WALES BUSINESS CHAMBER TASMANIAN CHAMBER OF COMMERCE & INDUSTRY VICTORIAN EMPLOYERS CHAMBER OF COMMERCE & INDUSTRY ACCI MEMBER NATIONAL INDUSTRY ASSOCIATIONS: ACCORD HYGIENE, COSMETIC AND SPECIALTY PRODUCTS INDUSTRY AGED CARE AND COMMUNITY SERVICES AIR CONDITIONING & MECHANICAL CONTRACTORS ASSOCIATION ASSOCIATION OF INDEPENDENT SCHOOLS OF NSW AUSTRALIAN BEVERAGES COUNCIL LIMITED AUSTRALIAN DENTAL INDUSTRY ASSOCIATION AUSTRALIAN FEDERATION OF EMPLOYERS & INDUSTRIES AUSTRALIAN FOOD & GROCERY COUNCIL AUSTRALIAN HOTELS ASSOCIATION AUSTRALIAN INTERNATIONAL AIRLINES OPERATIONS GROUP AUSTRALIAN MADE CAMPAIGN LIMITED AUSTRALIAN MINES & METALS ASSOCIATION AUSTRALIAN PAINT MANUFACTURERS FEDERATION AUSTRALIAN RETAILERS ASSOCIATION AUSTRALIAN SELF MEDICATION INDUSTRY AUSTRALIAN STEEL INSTITUTE AUSTRALIAN SUBSCRIPTION TELEVISION AND RADIO ASSOCIATION BUS INDUSTRY CONFEDERATION CONSULT AUSTRALIA COMMERCIAL RADIO FITNESS AUSTRALIA HOUSING INDUSTRY ASSOCIATION LIVE PERFORMANCE AUSTRALIA MASTER BUILDERS AUSTRALIA MASTER PLUMBERS & MECHANICAL SERVICES ASSOCIATION OF AUSTRALIA MEDICAL TECHNOLOGY ASSOCIATION OF AUSTRALIA NATIONAL ELECTRICAL & COMMUNICATIONS ASSOCIATION NATIONAL FIRE INDUSTRY ASSOCIATION NATIONAL RETAIL ASSOCIATION OIL INDUSTRY INDUSTRIAL ASSOCIATION PHARMACY GUILD OF AUSTRALIA PLASTICS & CHEMICALS INDUSTRIES ASSOCIATION PRINTING INDUSTRIES ASSOCIATION OF AUSTRALIA RESTAURANT & CATERING AUSTRALIA SCREEN PRODUCERS AUSTRALIA VICTORIAN AUTOMOBILE CHAMBER OF COMMERCE ACCI ChAFTA JSCOT Submission July