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5 Hot Spots for Manufacturers in the Aust-China FTA

17 November, 2014

The Australia-China FTA worth at least $18 billion is expected to be signed on Monday afternoon, however manufacturers still have "mixed feelings" about it, according to Ai Group CE Innes Willox.

"Many are hopeful that an FTA will help them meet their export and investment ambitions by making the large Chinese market more accessible and less of a risk to their intellectual property," he said.

"Many also are nervous about the serious risks of a sudden loss of competitiveness and greater exposure to unfair competition in the domestic market.

"As well, greater efforts need to be made to assisting Australia's SMEs in accessing this and other FTAs.  All studies point to a very low take up of advantages under Australia's FTAs.

"While DFAT provides information by putting the agreement on their website, this does little to inform companies of the steps that must be undertaken to take advantage of potential benefits and is not an effective way to extract value from the great expense and often considerable compromises involved in negotiating FTAs.

"From our close engagement with a wide cross-section of domestic manufacturers, and through the research papers we have prepared on manufacturers' attitudes to a China-Australia FTA over several years, we have distilled the following list of five hot spots for manufacturers."

5 FTA Hot Spots for Australian Manufacturers

Adequate transition arrangements for tariff cuts

Reductions in tariffs applying to manufactured goods imported from China should allow sufficient phase-in periods that give domestic businesses time to adjust. 

Such arrangements are commonly granted to producers in other countries with whom we have negotiated FTAs and, although to a much lesser extent, have also been negotiated to give some Australian manufacturers time to adjust under other FTAs.

Adequate anti-dumping protections against unfair competition

Australia's rights on anti-dumping and/or countervailing duties should not be diminished by a China-Australia FTA.

Progress on removing non-tariff barriers to trade with China

Non-tariff barriers to trade, including the preferential treatment afforded to China's State Owned Enterprises (SOEs) which may get investment rights, need to be addressed to ensure equitable treatment for Australian manufacturing exporters.

Protecting Australian Intellectual Property

Effective commercial safeguards in relation to intellectual property (IP) infringements are essential to Australia's ongoing relationship with China.

Ensuring full and fair opportunities for local suppliers to participate in domestic projects

Manufacturers are concerned to see that increased access to investment, particularly by China's State Owned Enterprises, are accompanied by measures that ensure that local suppliers retain full and fair access to supply domestic projects and are not squeezed out of the domestic market by preferential treatment for Chinese suppliers.