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China-Australia Free Trade Agreement: potential commercial implications

The China-Australia Free Trade Agreement (ChAFTA) was signed on the 17th June 2015, implementing a foundation in the next phase of inter-economic relationships between Australia and China. The potential for the ChAFTA to create opportunities for Australia is evident, with China accounting for Australia’s largest export market for goods and services and a nearly a third of total exports.

However, surrounding this growing economic relationship are questions around the potential implications of uncertainties about the standards of manufactured goods imported from China that do not meet Australia safety and quality regulations. What will be the implications of importing Chinese goods which may not pass Australia’s regulatory standards?

In its submissions to the Department of Foreign Affairs and Trade (DFAT) regarding the ChAFTA, the Australian Industry Group (AIG) has discussed the potential impacts that unsafe products from China that do not meet Australian safety and quality standards may have on Australian consumers and businesses. Furthermore, questions have been raised around whether the removal of tariffs under the ChAFTA could exacerbate these issues and how potential contract breaches and faulty Chinese products would be dealt with; with legal resolution channels becoming challenging.

More than 2000 recalls have been administered by the Australian Competition and Consumer Commission (ACCC) in the last 5 years, equating to 429 recalls per year on average.  In respect of faulty products, a recent review demonstrated that an average of 56% of goods were returned.

The ChAFTA will certainly have an impact on commercial Australia. It is without contention that there is mutual benefits for Australia and China from this agreement, with economists predicting that it will improve the efficiency of trade. Nonetheless, it can be expected that Australia will have to prepare for the consequences of circumventing strict safety and quality regulations in respect to a predicted escalation of Chinese imported goods.

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Written by Shine Lawyers. Last modified: September 20, 2017.

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