Manufacturers have mixed feelings about the pending China-Australia Free Trade Agreement,” says the Australian Industry Group.

While many manufacturers are hoping the new FTA will make the large Chinese market more accessible, others are nervous about the serious risks of a sudden loss of competitiveness, said AiGroup Chief Executive, Innes Willox.

They fear greater exposure to unfair competition in the domestic market and less of a risk to their intellectual property.

“Others are looking forward to boosting the competitiveness of domestic manufacturing by allowing them to source cheaper inputs from China,” Mr Willox said.

Mr Willox said greater efforts need to be made to assisting Australia’s SMEs in accessing the Australia-China FTA and other FTAs. 

All studies point to a very low take up of advantages under Australia’s FTAs.

Information provided on the Department of Foreign Affairs and Trade (DFAT) website does little to inform companies of the steps that must be undertaken to take advantage of potential benefits, said Mr Willox.

“It is not an effective way to extract value from the great expense and often considerable compromises involved in negotiating FTAs,” he said.

The AiGroup has warned of five FTA “hot spots” for manufacturers:

1. Adequate transition arrangements for tariff cuts

Reductions in tariffs applying to manufactured goods imported from China should allow sufficient phase-in periods that give domestic businesses time to adjust. Such arrangements are commonly granted to producers in other countries with whom we have negotiated FTAs and, although to a much lesser extent, have also been negotiated to give some Australian manufacturers time to adjust under other FTAs.

2. Adequate anti-dumping protections against unfair competition

Australia’s rights on anti-dumping and/or countervailing duties should not be diminished by a China-Australia FTA.

3. Progress on removing Non-Tariff Barriers to Trade with China

Non-tariff barriers to trade, including the preferential treatment afforded to China’s State Owned Enterprises (SOEs) which may get investment rights, need to be addressed to ensure equitable treatment for Australian manufacturing exporters.

4. Protecting Australian Intellectual Property

Effective commercial safeguards in relation to intellectual property (IP) infringements are essential to Australia’s ongoing relationship with China.

5. Ensuring full and fair opportunities for local suppliers to participate in domestic projects

Manufacturers are concerned to see that increased access to investment, particularly by China’s State Owned Enterprises, are accompanied by measures that ensure that local suppliers retain full and fair access to supply domestic projects and are not squeezed out of the domestic market by preferential treatment for Chinese suppliers.

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