The Asia Miner

OCT-DEC 2015

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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8 | ASIA Miner | October-December 2015 CHINA is already Australia's largest ex- port destination, with goods worth $95 billion and services worth $7 billion pro- vided to the Chinese market in 2013. Agricultural produce plays a major role and Australia's export relationship with China was worth $9 billion to the agri- cultural sector in 2013-14. The China Australia Free Trade Agree- ment (ChAFTA) is expected to have unprecedented benefits for Australian exporters, with former Australian Prime Minister Tony Abbott claiming that the agreement will bring billions to the econ- omy and 'drive higher living standards for Australians'. The ChAFTA will be subject to an ongoing review process, with the first required within three years. This is ex- pected to prompt further liberalization of trade with China. It includes a 'Most favoured nation clause', in respect of certain investment and services commit- ments, meaning that if agreements on more beneficial terms are subsequent- ly offered by China to another country, those terms will apply to Australia as well. However, this clause does not ap- ply to tariff levels. More than 85% of goods exported to China will be duty free upon entry into force and this figure will reach 93% in four years' time. At full implementation, 95% of goods exported to China under ChAFTA will be tariff free. The resources and energy sector is also a key ChAFTA component. Aus- tralia exported more than $90 billion of such products in 2013-2014. Almost 93% of these products will be duty free from entry into force and most remaining tariffs will be removed within four years. On full implementation of the agree- ment, 99.9% of these exports will enter into China duty free. Financial service providers such as banks, insurers and securities firms will have greater access to the Chinese market. Under ChAFTA financial service providers will be able to establish joint venture futures companies, up to 49% of which may be Australian owned, and Australian insurance providers will have liberalized access to China's statutory third party liability motor vehicle insur- ance market. Other benefits: • Tourism service providers are able to invest in the construction and op- eration of hotels and restaurants in China; • Healthcare providers may establish and operate wholly-owned hospitals and aged care facilities in China; China Australia Free Trade Agreement a catalyst China is evolving into an economic powerhouse with cities like Beijing being prime examples of China's new modern face. • Law firms have guaranteed access in the Shanghai Free Trade Zone, as they are now able to establish 'commercial associations' offering Australian, Chinese and international legal services; • Australian Telecommunications pro- viders are able to provide certain services in the Shanghai Free Trade Zone; and • China will list 77 private higher ed- ucation institutions on a Ministry of Education website, giving these pro- viders a greater profile with prospec- tive Chinese students. Austrade Beijing representative Appy Gao says considering the compat- ability and strong trade relationship between Australia and China it is very important that business is strength- ened. Compatability already exists in resources supply but there is plenty of scope for Australian expertise to be used more in the continuing de- velopment of China's mining industry, particularly in environmental initiatives and mine safety. "China's mining ma- chinery industry is already big but many manufacturers aren't as smart or efficient as they can be, which is where Australia has a role to play. "China's central government has placed great emphasis on the inter- net of things and wants industry to use higher standards in going about business. Industry is also keen to up- grade by adapting smarter methods of increasing production while the mining industry is determined to improve effi- ciency. This process presents opportu- nities for Australia. "ChAFTA is paramount for the rela- tionship between Australia and China to continue to develop for the beneft of both countries. It is important for Australia's man- ufacturers to grow exports to China and ChAFTA will facilitate this. It provides a plat- form for Australian companies to engage more with Chinese companies and also serves as a catalyst for conversation to take place."

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