Having concluded and implemented the Korea, Japan and China Free Trade Agreements, few could blame Andrew Robb for believing that his work was done and retiring. His replacement, poor Steven Ciobo, has been left with a number of smaller FTAs to negotiate in a much more protectionist international trade environment. Below we provide a brief update on Australia's FTA negotiations..
Singapore – We have had a FTA with Singapore since 2003 and it now seems outdated. In particular, the rules or origin and certificates of origin procedures were very cumbersome. Last year Australia and Singapore agreed to amend the FTA. Significant outcomes from the amendments are:
Self-certified certificates of origin;
The ability to use the one self-certified certificates of origin over multiple consignments over 12 months; and
Updated rules of origin (replacing a previous 50% local content test).
The legislation to enact the amendment is currently working its way through parliament and the changes will hopefully be implemented this year.
Most exports to Singapore are duty free already and most imports will be duty free under either the original Singapore FTA or the ASEAN FTA. However, the amendments will mean that it is easier to use the Singapore FTA than the ASEAN FTA for future imports of Singaporean originating goods.
Other FTA negotiations
Trans Pacific Partnership – The US may have pulled out, but the TPP is not dead. The remaining parties are still meeting to decide if this FTA without the US makes sense. Given Australia already has an FTA with the US, the withdrawal of the US from the TPP shouldn't be a deal breaker.
EU – Australia and EU have aimed to start negotiations by the end of the year. The EU is seeking permission from members to fast track negotiations as opposed to requiring approval from each individual EU member.
Regional Comprehensive Economic Partnership – This is the big one. It involves China, India, Japan, Korea, the ASEAN countries, Australia and NZ. Negotiations are up to their 20th round and it is hoped that negotiations will be concluded by the middle of next year. Don't expect a big expansion of the China, Japan or Korea FTAs, but this FTA will open up the Indian market. It may also go some way to addressing the current Asian FTA noodle bowl.
India and Indonesia – different FTAs, same problem - both countries are very protectionists and Australia is having problems negotiating "high quality" agreements. Indonesia is now lowering expectations to a "good quality" agreement. Australia and Indonesia have set a goal to have it concluded by the end of the year but don't hold your breath. In regards to India, we expect an outcome under RCEP before an individual FTA between India and Australia is negotiated.
Pacific Alliance Free Trade Agreement – This FTA involves Mexico, Chile, Peru and Columbia. Negotiations have just kicked off so any outcomes are likely to be late 2018 at the earliest. While neither of these countries are our major trading partners, you never know what could happen if a wall came between US and Mexican relations.
Please feel to contact us if you need assistance with FTA compliance or fully utilising Australia's existing FTAs.