UPDATE: The China-Australia Free Trade

As published in CK Momentum Issue 6  (Click here to download)

In our previous issue, we broadly addressed the China-Australia Free Trade Agreement (“ChAFTA”). For Australia, the winners are the dairy, mining and services sectors which will benefit from the eventual elimination of current tariffs and other trade barriers. The losers (for the time being) are rice, sugar, wheat, cotton, canola and maize growers who have to wait another 3 years for negotiations on their sectors.

Senior Associate Katie Gould outlines the changes so far and what’s to come.



Major concessions have been agreed in the agriculture and food sectors with the removal of all import tariffs on Australian dairy, meat, wine, seafood and horticultural products. The removal of import tariffs addresses a substantial barrier to trade faced by Australian exporters, with tariffs as high as 20% (dairy and wine), 25% (beef) and 23% (sheep meat) currently imposed on imports into China. It is reported that the ChAFTA will provide a quota of Australian wool that may be exported to China on a duty free basis. This is in addition to China’s existing commitments on wool under the General Agreement on Tariffs and Trade.


The Foreign Investment Review Board (“FIRB”) screening threshold in non sensitive sectors will be raised from $248M to $1.078B. This increase will bring it into line with other free trade agreements brokered between Australia and Korea, Japan and the United States.

From 1 July 2015, the Australian Taxation Office will collect information on all foreign investment in agricultural land. It will also undertake a stocktake of existing ownership which reflects the increased emphasis on reporting as a result of the new foreign ownership register.


Investments in commercial real estate will now fall under the non-sensitive sector threshold of $1.078B, which is an increase from the current review threshold of $248M.


From 1 March 2015, the review threshold for investment in agricultural land was lowered to $15M.

This threshold is calculated by reference to the cumulative value of Australian agricultural land owned by the foreign investor, including the value of the proposed acquisition. The new arrangements only apply to contracts entered into from 1 March 2015.

Australia’s foreign investment policy has been updated to include a pre-approval process for the acquisition of an interest in rural land incidental to an activity other than agriculture. However, preapproval will be limited to a certain monetary value and provided for periods of no more than 12 months.

ChAFTA contemplates a new screening threshold of $53M for foreign investment in agricultural businesses so there is an expectation the Government will introduce a new threshold for agricultural businesses.


It is reported Australia will grant certain categories of Chinese citizens with rights to enter and work in Australia for a limited time period, including:

•  intra corporate transferees, independent executives and contractual service suppliers, for up to 4 years; and

•  business visitors for up to 90 days (or 6 months in the case of service providers).



Australia has not changed its position on the review of investments by Chinese state owned enterprises (“Chinese SOEs”) which has been deferred to the 3 year review of the ChAFTA. Investments by Chinese SOEs remain subject to the same review process applicable to all foreign government related investors. Direct investments (generally 10% or more) by such investors continue to require scrutiny by the FIRB.


The ChAFTA does not affect the current review thresholds for “sensitive sectors”, including media, telecommunications and defence.


Currently, a legal review and translation of the text of the ChAFTA is underway by Australia and China. Once China and Australia have undertaken their respective treaty making processes, the ChAFTA is expected to come into force in mid to late 2015. We will continue to monitor the progress of the ChAFTA and keep you up to date with key developments.

This bulletin is produced as general information in summary for clients and subscribers and should not be relied upon as a substitute for detailed legal advice or as a basis for formulating business or other decisions. ClarkeKann asserts copyright over the contents of this document. This bulletin is produced by ClarkeKann. It is intended to provide general information in summary form on legal topics, current at the time of publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters. Liability limited by a scheme approved under professional standards legislation. Privacy Policy


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