Australian Embassy


The Hon Simon Crean MP - Minister for Trade
Date: 27 February 2009

Australia signs historic regional Free Trade Agreement

Minister for Trade Simon Crean joined Trade Ministers from the 10 members of the Association of South East Asian Nations (ASEAN) and New Zealand in signing the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) in Hua Hin, Thailand.

This is the largest FTA Australia has ever signed and will reduce or eliminate tariffs across a region that is home to 600 million people and has an annual GDP of A$3.2 trillion.

Australia’s two-way trade with the ASEAN region is worth $80 billion a year. The agreement will deliver new opportunities across the board for Australian exporters.

“With this level of trade, which is bigger than our trade with Japan or China or the United States, this agreement with ASEAN has great potential to increase job opportunities for Australian workers,” Mr Crean said.

According to Austrade, there are around 18,500 Australian exporters doing business in ASEAN countries.

“I have asked Austrade to roll out a commercial strategy to take advantage of the market openings created by AANZFTA,” said Mr Crean.

“Trade barriers are coming down in the region. Our challenge to Australian business and exporters is to look to South East Asia to take advantage of the new opportunities.”

AANZFTA will bind current low tariffs and over time eliminate tariffs on between 90 and 100 per cent of tariff lines, covering 96 per cent of current Australian exports to the region.

These tariff reductions will put in place a guarantee against sudden tariff surges and are an effective barrier against protectionist moves in the midst of the present economic crisis.

“This is the first free trade agreement Australia has signed since the onset of the global financial crisis,” he said.

“It powerfully demonstrates Australia’s - and the region’s - strong commitment to opening up markets in the face of this crisis. This will keep trade flows open in the region, increase growth, and give a much-needed boost to confidence,” Mr Crean said.

“This is an extremely strong signal to the rest of the world that the Asian region remains committed to pursuing economic growth, exports and jobs to help drive economic recovery.”

The FTA includes an economic cooperation component to provide technical assistance and capacity building to developing ASEAN countries to assist in implementation of the FTA.

“Australia regards this cooperation as an integral part of the FTA and I am pleased to announce that Australia will provide up to $20 million in funding for worthwhile capacity-building projects over a five year period,” Mr Crean said.

“Australia stands to gain from this agreement across many sectors, including exports of agricultural products, industrial goods and services.

“Australian primary producers are now being guaranteed greater access to developing South East Asian markets, many of which have a growing appetite for high quality Australian produce,” Mr Crean said.

The Minister for Trade said the Australian industrial sector had also been given an opportunity to expand exports into the ASEAN region.

“The Australian pharmaceutical industry, which already exports $600 million worth of product each year to the region, will be operating in almost a completely free trade zone in ASEAN,” he said.

In the chemical sector, most higher tariffs will be eliminated. For electrical machinery, almost all tariffs will be eliminated in our major markets.

With the car industry, Mr Crean said there had been tough negotiations and Australia would eliminate tariffs for all ASEAN nations.

“But there will be slower phase-out arrangements for tariffs on vehicles manufactured in Indonesia, Malaysia and Thailand as Australia demanded reciprocal arrangements with those countries,” he said.

Mr Crean said some of these higher car tariff schedules could be addressed in bilateral FTAs.

“I am pleased to say the agreement will achieve very significant tariff cuts on automotive parts and components,” Mr Crean said.

Makers of automotive parts will now have greater opportunities to participate in automotive global supply chains.

“We have also secured a good outcome on services, increasing certainty for exporters in fields such as professional services, education, financial services and telecommunications as well as construction and mining services”, Mr Crean said.

On investments, AANZFTA will create greater certainty for Australian investors in the region with access to international arbitration extended to the whole region.

“I am proud of this agreement, as it represents a historic milestone for Australian trade negotiations,” Mr Crean said.