China and Australia Sign Free Trade Agreement

After 10 years of negotiation China and Australia signed a Free Trade Agreement (FTA) on June 17th 2015. This marks yet another milestone in China’s foreign trade policy and yet another high-level FTA signed by China with another major economic force in the Asia Pacific region. The FTA will cover over 10 industry sectors including goods, services and investments with the overall aim of achieving a fair and mutually equitable FTA.

Products accounting for 85.4% of trade between both countries will be subject to 0% import tariff after implementation of the FTA. The FTA will be implemented in specific stages as outlined in the schedule and the reductions in taxes will average more than 90% across all sectors. An official from the Chinese Ministry of Commerce estimated that Chinese exports to Australia will be exempted from 1.66 billion dollars of import tariffs while Australian exports will be exempted from 1.001 billion dollars.

For the cosmetics industry the FTA will see import tariffs reduced on average by 40%, reductions which should be passed on to the consumer and bring about a significant decrease in retail price. The FTA agreement should also see cosmetic companies with existing trade in China increase their profits and present Australian cosmetic companies considering entering the Chinese market for the first time with a more profitable investment potential.