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The Australian-Chinese Free Trade Agreement: Implications for South Africa

Trade Reports

The Australian-Chinese Free Trade Agreement: Implications for South Africa

The Australian-Chinese Free Trade Agreement: Implications for South Africa

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This paper examines the Free Trade Agreement (FTA) between Australia and China (ChAFTA) that was signed on 17 July 2015. The examination provides an emphasis on the implications for South Africa. It concentrates on an analysis of Australia’s merchandise exports to China, with these exports set in a perspective that enables us to assess access concessions against South Africa’s (and to a lesser extent New Zealand’s) exports. South African imports from China face significantly different access issues than do the comparable Australian imports. Accordingly, we feel that there is little to be gained by dwelling on the tariff concessions that Australia has made to China.

During 2014 China imported goods worth some $44.6 billion from South Africa, a figure just under half of the Australian imports of $98 billion. We warn, however, that the data for these imports from South African does not match the reported exports from South Africa to China. It is made even more complex by the Chinese use of a ‘Special’ import line that is undisclosed and comprises imports from South Africa to about one half of its significant value. Much of this trade may be gold, and as South Africa does not disclose its gold export destinations it is difficult to assess the real values of this trade.

There have been some changes to the investment regimes in both countries, but these seem to be relatively minor. The exceptions are that concessions have been granted with respect to movement of people to support investments and some liberalisation of the services sectors. The usual endeavours to cooperate more comprehensively on the general non-tariff measures (NTMs) are incorporated into the agreement. This is so as the rules of origin (RoO) procedures seem to be standard and the parties have agreed that neither member will introduce or maintain export subsidies on goods destined for the territory of the other.

In the final analysis there are few implications for South Africa from ChAFTA. Australia gains some advantages in the Chinese resources market, but while these are important they are not massive. In general, the tariffs are low and there is limited South Africa-Australia head-to-head competition in most lines. Australia gains some advantages in agriculture, but these are mainly in commodities where South Africa does not compete – except for perhaps wine. There are no changes to the important sugar market, and in other merchandise trade sectors there are few advantages to Australia over South African competitors in China. Crucially, on Chinese imports Australia has negotiated its already low tariffs on clothing to go to zero very quickly. This is something that South Africa could not contemplate under the existing trade regime. Elsewhere in the trade remedies, services, and investment chapters, there appears to be few pointers for South Africa to muse over.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.


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