Lexi Webster
Australia currently has 18 free trade agreements (FTAs) in force with various countries and trade blocs. These agreements are international treaties that reduce or eliminate certain barriers to trade in goods and services, as well as investment. Australia's FTAs cover a diverse range of products and services, including agricultural produce, pharmaceuticals, insurance services, and audiovisual content. The country's FTAs have been negotiated to benefit Australian exporters, importers, producers, and investors by providing access to key markets and improving commercial ties with trading partners. This paragraph introduces the topic of country-specific products and services included in Australia's FTAs, setting the context for further exploration of the benefits and impacts of these agreements on Australia's economy and various industries.
| Characteristics | Values |
|---|---|
| Number of countries Australia has FTAs with | 20 |
| Number of FTAs Australia has | 18 |
| Australia's FTA with New Zealand | ANZCERTA or CER |
| Australia's FTA with ASEAN and New Zealand | AANZFTA |
| Australia's FTA with South Korea | RCEP |
| Australia's FTA with the UK | A-UKFTA |
| Australia's FTA with India | ECTA or IA-ECTA |
| Australia's FTA with China | RCEP |
| Australia's FTA with Japan | RCEP, CPTPP, JAEPA |
| Australia's FTA with Canada | CPTPP |
| Australia's FTA with Mexico | CPTPP |
| Australia's FTA with the US | AUSFTA |
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What You'll Learn
Australia-United States FTA
The Australia-United States Free Trade Agreement (AUSFTA) came into force on 1 January 2005. The agreement aimed to strengthen trade and commercial ties between the two countries, providing significant opportunities for Australian exporters and investors.
Under the AUSFTA, more than 97% of Australia's non-agricultural exports to the United States became duty-free, excluding textiles and clothing. Two-thirds of agricultural tariff lines were also eliminated, with temporary limits on the importation of certain Australian agricultural products such as beef and sugar cane. The agreement outlines a system for eliminating most tariffs for agricultural products traded between the two countries, with certain goods being fully applicable immediately, and others being phased in over a period of years or temporarily applicable. The agreement also established a Committee on Trade in Goods, providing a platform for arbitration and addressing issues related to tariffs, rules of origin, and customs administration.
Australian companies gained access to the federal government procurement market in the United States, as well as the government procurement markets of 31 US states. The AUSFTA has significantly impacted bilateral trade, with goods and services trade between the two countries more than doubling since its implementation. Two-way investment has also more than tripled, with the United States being Australia's third-largest two-way trading partner in goods and services in 2023, worth $98.7 billion.
The AUSFTA has faced some criticism and concerns from various sectors in both countries. Members of the Australian film and television community expressed worry over the potential impact on regulations enforcing a minimum amount of locally produced content. On the other hand, the American agricultural sector initially feared the agreement might interfere with government farm subsidy programs, while trade unions and groups in the United States raised concerns about potential issues similar to those experienced under NAFTA.
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Australia-India Economic Cooperation and Trade Agreement (IA-ECTA)
Australia has 18 free trade agreements (FTAs) currently in force with over 20 countries. FTAs are international treaties between two or more economies that reduce or eliminate certain barriers to trade in goods and services, as well as investment. They facilitate stronger trade and commercial links between the countries involved.
The Australia-India Economic Cooperation and Trade Agreement (IA-ECTA) entered into force on 29 December 2022. The agreement secures market access to the world's most populous country, India, and its fast-growing economy, providing trade diversification opportunities for Australian producers and exporters. Over 85% of Australian goods exports by value to India will be tariff-free, increasing to 90% by 1 January 2026. Key Australian goods that will enter India duty-free include sheep meat, wool, barley, oats, and fresh rock lobsters. The IA-ECTA also substantially reduces tariffs for key agricultural products such as wine, almonds, and lentils.
The IA-ECTA is one of many FTAs that Australia has negotiated to benefit Australian exporters, importers, producers, and investors by reducing and eliminating certain barriers to international trade and investment. Other examples include the Australia-New Zealand FTA (ANZCERTA or CER), which entered into force on 1 January 1983, and the ASEAN-Australia-New Zealand FTA (AANZFTA), which entered into force on 1 January 2010 for eight countries and later expanded to include Thailand, Laos, Cambodia, and Indonesia on separate dates.
The United States is Australia's largest and most significant investor, with investment in Australia standing at $1.17 trillion in 2023. The Australia-United States FTA (AUSFTA) entered into force on 1 January 2005, with more than 97% of Australia's non-agricultural exports to the United States becoming duty-free and two-thirds of agricultural tariff lines going to zero. Since the AUSFTA came into force, bilateral goods and services trade between the two countries has more than doubled, and two-way investment has more than tripled.
FTAs aim to provide a competitive edge for Australian businesses by reducing or removing barriers to trade and investment, enabling them to seek new opportunities in international markets. They can also remove barriers in highly protected markets, allowing Australian exporters to gain a foothold and expand their business.
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ASEAN-Australia-New Zealand (AANZFTA)
The ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) is a free trade agreement (FTA) between the Association of Southeast Asian Nations (ASEAN) and Australia and New Zealand. It came into force on 1 January 2010 for eight countries: Australia, New Zealand, Brunei, Burma, Malaysia, the Philippines, Singapore and Vietnam. Thailand, Laos, Cambodia and Indonesia followed in 2010, 2011, 2011 and 2012, respectively.
AANZFTA is a regional FTA that aims to reduce or remove barriers to trade and investment between the participating countries. By facilitating access to these markets, the agreement provides significant commercial benefits to exporters and wider economic benefits to all. For instance, the Australia-India Economic Cooperation and Trade Agreement (ECTA), which came into force in December 2022, provides over 85% of Australian goods exports by value to India with tariff-free access, increasing to 90% by January 2026. Key Australian goods that will enter India duty-free include sheep meat, wool, barley, oats and fresh rock lobsters.
Australia has 18 FTAs currently in force with over 20 countries. Other FTAs include the Australia-United Kingdom Free Trade Agreement (A-UKFTA), the Regional Comprehensive Economic Partnership Agreement (RCEP), the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) and the Australia-United States Free Trade Agreement (AUSFTA).
FTAs can be bilateral, between Australia and one other country, or regional, involving Australia and a group of countries. They facilitate stronger trade and commercial links between the countries involved, cutting tariffs when exporting between markets and reducing non-tariff barriers to trade.
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Regional Comprehensive Economic Partnership Agreement (RCEP)
The Regional Comprehensive Economic Partnership Agreement (RCEP) is an international treaty that reduces or eliminates certain barriers to trade in goods and services, as well as investment. It was signed on 15 November 2020, by 15 member countries who participated via video link due to the COVID-19 pandemic. RCEP came into force on 1 January 2022 and is the world's largest FTA. It has been ratified by 14 countries, including Australia, Brunei Darussalam, Cambodia, China, Indonesia, Japan, Lao PDR, Malaysia, New Zealand, the Philippines, Republic of Korea, Singapore, Thailand, and Vietnam.
RCEP is the first agreement to create a free trade agreement between the large economies of China, South Korea, and Japan. However, trends in 2022 indicate a preference for these three countries to trade with other RCEP members rather than each other. Trade volume between these countries declined from 2020 to 2023, while trade between RCEP members as a conglomerate grew.
The RCEP is not as comprehensive as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), another free trade agreement in the region that includes some of the same countries. The RCEP does not establish unified standards on labour and the environment, nor does it commit countries to open services and other vulnerable areas of their economies.
Despite this, the RCEP is still economically significant, particularly for China, Japan, and Korea. It will reorient trade and economic ties away from global linkages toward regionally focused relationships in East Asia. The PIIE working paper also states that the RCEP will be economically significant with or without India and will be more significant than the CPTPP.
Australia has 18 free trade agreements currently in force, including RCEP. Australia negotiates FTAs to benefit Australian exporters, importers, producers, and investors by reducing and eliminating certain barriers to international trade and investment.
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Australia-New Zealand (ANZCERTA or CER)
The Australia-New Zealand Closer Economic Relations Trade Agreement, also known as ANZCERTA or CER, is a comprehensive free trade and economic agreement between Australia and New Zealand. It came into effect on 1 January 1983 and was Australia's first bilateral agreement. ANZCERTA is recognised by the World Trade Organization (WTO) as a model Free Trade Agreement.
ANZCERTA eliminates tariffs and minimises trade barriers on all goods traded between Australia and New Zealand. This includes agricultural products and services. The agreement also includes rules of origin and local content provisions. Goods are considered to originate from each country if there is a change in HS code headings at the specified level for each good, or if they meet a minimum regional value content specified for each good.
The agreement also includes investment provisions, which forbid performance requirements that require, as a condition of investment, export quotas, domestic content quotas, technology transfer, and other non-tariff barriers. It also carries national treatment and most-favoured nation treatment provisions, requiring investors from either country to be treated equally to domestic investors.
ANZCERTA has resulted in a high level of economic integration between Australia and New Zealand. Australia is the largest investor in New Zealand, and New Zealand is the third-largest investment destination for Australia. Over half of Australia's total investment in New Zealand is Foreign Direct Investment.
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Frequently asked questions
An FTA is an international treaty between two or more economies that reduces or eliminates certain barriers to trade in goods and services, as well as investment.
The U.S.-Australia FTA opened markets for services such as life insurance and express delivery, and American farm exports including processed foods, fruits and vegetables, corn, and soybeans.
The ECTA provides for Australian goods such as sheep meat, wool, barley, oats, and fresh rock lobsters to enter India duty-free. It also substantially reduces tariffs for key agricultural products such as wine, almonds, and lentils.
The KAFTA eliminates very high tariffs on a wide range of exports including beef, wheat, sugar, dairy, wine, horticulture, and seafood.
The ACLFTA eliminates Chile's tariffs on all meat and wine products, as well as key dairy export lines. It also establishes recognition of Australia's beef grading system in Chile.
