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International Trade Negotiations Update

Release Date

18 October 2016

DFAT Update Meeting on International Trade Negotiations for Peak Organisations

Overview of Current Trade Agenda

1. Context

  • There is a slowdown in global trade; trade has not returned to pre-GFC levels, which is due to several reasons, two of which are:
    • Transition in the Chinese economy;
    • Rising protectionist sentiment globally.
  • Issues such as Brexit, China’s overcapacity for steel production and US-China tensions are also impactful.
  • There also remains a weakness in the multilateral system, which is partly captive to geopolitical rivalries.
 

Overview of Current Negotiations

2. Trans-Pacific Partnership

  • JSCOT has now been reconstituted and is considering the TPP over coming weeks. Public hearing will be held on major cities. Canberra hearings will be held on Oct 15. JSCOT will report to Parliament during the last sitting week (Nov 21)
  • The Senate has also now initiated a separate Inquiry by the Foreign Affairs Defence and trade Committee which is expected to be conducted during October – February. This inquiry reports to the Senate on February 7, 2017
  • TPP legislation has been tabled in the parliaments of New Zealand and Japan.
  • The US is the biggest concern; uncertainty surrounding its passage through Congress. The Trans-Pacific Partnership (TPP) progress is more positive than the media suggests; the US will potentially present the agreement in the Lame Duck session of US Congress (November – January).
  • In the post TPP world:
    • TPP members need to agree on implementation before new members are considered
    • There appears to be some consideration of a “TPP Lite” agreement progressing exclusive of the US should the US fail to approve it.

3. Indonesia-Australia CEPA

  • Negotiations were reactivated in March 2016; Indonesia was considered to be “very keen”.
  • During the May round of negotiations there was a large Indonesian delegation and the 12-18 month timeframe was established.
  • Further negotiations were held in Sydney in August.
  • The agreement must build on AANZFTA:
    • There will be a focus on trade in services.
    • There will be a greater focus on economic cooperation; part of this will mean Australia assisting Indonesia with economic reforms. 
  • DFAT has seen and appreciated the IABPG report Two Neighbours, Partners in Prosperity developed through ACCI leadership.

4. India-Australia FTA

  • In 2015, India was not in a position to effectively negotiate.
  • India was more focused on RCEP negotiations.
  • The negotiations are now in stock-take.
  • Key issues include the introduction of GST in India and India’s reliance on tariffs as a source of revenue for the government.

5. Regional Comprehensive Partnership Agreement

  • We are 3 years into negotiations, and reaching detailed components of the agreement.
  • In 2016 there have been three rounds so far in April, June and August. There will be further rounds in China in mid-October and in Indonesia in December. Negotiations will continue in 2017.
  • Currently negotiations are focused on ‘Landing Zones’ for goods, services and investment to determine the level of ambition in each area.

6. Pacific Agreement on Closer Economic Relations (PACER) Plus

  • The legal text of the agreement was concluded on August 26.
  • Parties are currently working on market access commitments with a view to signing the agreement before the end of 2016.
  • Australia is keen to boost trade and investment into the Pacific to enhance development; a readiness package has been established to ensure the agreement can be taken up effectively.

7. WTO Trade in Services Agreement (TiSA)

  • The agreement is aimed to be concluded by the end of 2016.
  • Still many difficult issues to be resolved.
  • There remains disagreement between the EU and US on the issue of market access.
  • Australia will support the Trade in Services Agreement, which will develop the next iteration of the General Agreement on Trade in Services (GATS).

8. WTO Information Technology Agreement

  • The agreement eliminates tariffs on 201 products; it will be gradually implemented over three years from January 1 2017.
  • The list was tabled in Parliament at the end of August, but will need to be reviewed by JSCOT.
  • WTO Environmental Goods Agreement
  • The agreement will aim to be concluded by the end of 2016.
  • The focus will be on tariff elimination.
    • The key products are the 54 goods listed by in 2012 by the APEC leaders

10. WTO Agreement on Government Procurement

  • Australia has presented its accession offer to the WTO.
  • There is no set timeframe for the agreement.
 
 

Overview of Future Negotiations

11. European Union

  • A scoping study was launched last year.
    • The EU drafted the study, and now Australia is reviewing the draft.
    • The scoping study is to be finished by the end of 2016.
  • The EU Parliament needs detailed information before formally launching negotiations.
  • The focus of the future agreement will be on agricultural market access and then on services; the digital economy and ecommerce will also be important.
  • The Australian domestic submission process is still under way.

12. United Kingdom

  • The Prime Minister of Australia has said he would like an Australia-UK FTA
  • Australia is very likeminded; normal areas of friction such as services and agriculture are less problematic in this case.
  • However, the UK has to go through several steps to leave the EU, including auctioning Article 50 and formalizing a new trade relationship with the EU.
  • Therefore, the UK will potentially need to prioritize EU relationship and agreement.
  • Australia has offered help of expert trade negotiators in training the UK in the process of FTA negotiation.

13. Gulf Cooperation Council (GCC)

  • The only current agreement under negotiation is between the GCC and China.
  • DFAT suspects that negotiations with the Republic of Korea, EU, Turkey and India will be prioritised.
  • Australia is keen to negotiate, but believes it is not a priority country for the GCC.

14. Australia-Colombia FTA

  • Any negotiations are on-hold until TPP is concluded.
  • Internal peace processes and other issues need to be addressed before Colombia has capacity to negotiate.
 

Overview of FTA Implementation

15. North Asia Agreements

  • DFAT urges that we need to use the agreement as much as possible.
  • Marketing initiatives have been established.
    • The DFAT FTA internet portal has been designed with functionality like a tariff finder and rules of origin advice; aimed at SMEs.
    • A seminar series has been run with Austrade.
    • It was suggested that DFAT needed to work closer with customs brokers and freight forwarders to understand the problems and gain visibility in promoting the agreements.
  • DFAT is pleased with the utilisation rates, but needs data from partner countries to fully understand the situation.
    • 90 per cent of Australian exporters are using JAFTA.
  • DFAT is seeking feedback and submissions on the use of FTAs and how to improve utilisation rates.

16. Singapore-Australia FTA

  • DFAT is beginning to look into amend or increase concessions, particularly in the areas of legal, finance, education and other services.

17. ASEAN-Australia-New Zealand FTA

  • The agreement is due for review; the review was pushed back 12 months due to competing FTA interests.
  • The value of the agreement needs to be understood moving forward, in particular in light of RCEP and the TPP.
  •  However, more could be done in the areas of services and investment.
  • DFAT will seek input for the review from stakeholders pre-update.

18. Malaysia-Australia FTA and Thailand-Australia FTA

  • Both agreements are due or will be due for review. 
  • There is uncertainty regarding the value of the review given AANZFTA and RCEP negotiations.
  • DFAT will also seek input for the review from stakeholders pre-update

19. Australia-US FTA

20. Australia-Chile FTA

  • The agreement is considered to be a catalyst for activity in South America.
  • 100 Australia businesses already operate in Chile.
  • The Australia-Chile Economic Leadership Forum has discussed key industries and issues such as mining and government procurement.
     

Other Issues

21. Investor State Dispute Resolution and JAEPA

  • CHAFTA potentially triggered the ISDS clause in JAEPA, and so the EPA must come under review.
  • However, there is little urgency as the TPP may override the agreement due to ISDS provisions.

22. WTO

  • There are now no ongoing negotiations for the Doha Round; no agreement is foreseeable.
  • There is now a greater appetite to conducting plurilateral agreements within the WTO; fewer countries can move further and faster in the process.
  •  Australia’s current position is to ‘wait and see’; agreements could potentially cover areas such as the disciplining of domestic support of agriculture, technical barriers to trade, fisheries and pallets/containers.
  • Despite the failing of the Doha Round, the WTO legal mechanisms are still widely used.
    • Outreach events are planned; the next in November 2016.
    • ISDS is still on the table for discussion.

23. G20

  • The G20 meeting was held in Hangzhou, China in early September.
  • Germany will assume the President of the G20 in 2017; there will be a summit held in July 2017.
    • The digital economy is predicted to be on the agenda.

24. APEC

  • There is an APEC meeting on November 19 and 20, 2016.
  • There are two major deliverables
    • A strategic study of a Free Trade Agreement for APEC
    • The Services Roadmap for 2025.

25. DFAT Community Consultations

  • DFAT has put out a call for suggestions on how best to reach out to stakeholders regarding trade negotiations and agreements. 

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