The much-anticipated free-trade agreement between Australia and Japan looks set to be completed as soon as July this year, promising a major boon for Australian exporters.
The agreement, which commentators have suggested is to be signed when Japanese Prime Minister Shinzo Abe visits Canberra, would be the second significant trade agreement with a principal Asian market. In December, an agreement was signed with South Korea, Australia’s third largest export market.
A third agreement, with Australia’s largest Asian market, China, is still some way off, but hopes remain that signatures will be swapped before the end of the 2014 following a promise by Australian Prime Minister Tony Abbott in October last year to conclude negotiations with the three Asian economic powers within 12 months.
Trade between Australia and South Korea was worth almost $31 billion in 2012, with exports to the Asian peninsula worth $26.6 billion, or 7% of Australia’s total exports. The economy is expected to be boosted by as much as $650 billion between 2015 and 2030 as a direct result of the Free Trade Agreement.
Under the terms of the agreement, South Korea’s tariffs on a range of agricultural products and manufactured will be eliminated, including the removal of an 8% tariff on automotive supplies and 15% on wine. Tariffs on Australian beef would be phased out over 15 years.
The significance of the trade deal was highlighted by Trade Minister Andrew Robb when he admitted it was a higher priority for the current government than any other issue with Japan.
“Japan’s a huge market. It’s one of the biggest economies in the world and we already have a huge relationship but this would turbo-charge it. There is an enormous scope for Australia to provide high-value products and services to a sophisticated market.”
Two-way trade between Australia and Japan is estimated to be worth $53 billion, and the free trade agreement could see the Australian economy boosted by as much as $39 billion over the next 20 years. The potential for exporting to Japan is, therefore, set to increase dramatically.
According to some media sources, it is expected that tariffs on Australia’s beef exports will be cut by 8.5%, while Australia will eliminate its 5% tariff on Japanese auto imports.
