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Monthly Archives: January 2010

Love Thy ASEAN Neighbour: Your Invitation to Free Trade


Come January 1, 2010 Australia’s closest neighbours are opening their doors to free trade with us Aussies. If you’d like to take advantage of the opportunities that come with this, you’ll need a sound trade strategy and the right documentation. Australian Business International Trade Services can assist with both.

What’s the story?

The expected ratification of the ASEAN Australia New Zealand Free Trade Agreement (AANZFTA) on January 1, 2010 will provide a progressive reduction, or in most cases, elimination of tariffs on Australian good exports, and an elimination of ALL Australian tariffs on imports from AANZFTA parties.

The agreement covers goods, services, investment, intellectual property, e-commerce, temporary movement of business people as well as economic cooperation. It also contains measures relating to customs procedures and cooperation, sanitary and phytosanitary measures, standards, technical regulations and conformity assessment procedures and competition policy.

What does this mean for you?

Australian goods and services will now be more competitive in the 11 countries [Brunei, Burma, (Myanmar), Cambodia, Indonesia, Laos, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam] participating in the agreement. It also means that imports from these countries will become cheaper, it will be easier for Australian service providers to do business with these countries and Australian investors in ASEAN will achieve a greater level of transparency and certainty.  

What you need to know

  1. You require the right documentation
    To take advantage of the tariff reductions and greater market access, Australian merchandise exporters will need to obtain an AANZFTA Certificate of Origin for each order; verifying the origin of your product. Australian importers will also need to ensure their suppliers understand the AANZFTA protocol and include the appropriate documentation with their shipments.
  2. Varying timelines for tariff reductions means a blanket approach won’t work
    The tariff reductions and eliminations timeframe varies according to product and country in question. It therefore pays to do your homework on the specific timeframes for each country and then develop a strategy based on which market you should enter first or when and where you should switch suppliers.
  3. If you don’t use this head start, you will lose it
    The AANZFTA provides Australian businesses with a clear advantage over countries that are have yet to sign FTAs with ASEAN. However, with China, Korea, Japan and India having already established FTAs with ASEAN, as well as a number of countries having bi-lateral FTAs with individual ASEAN countries, and more FTAs in the pipeline, if you don’t take advantage of this opportunity now or in the near future, you will lose it.
  4. You can choose which FTA you’d like to use
    The bilateral FTAs Australia has with New Zealand, Singapore and Thailand will not be affected by AANZFTA, providing you meet the Rules of Origin (ROO) under the relevant FTA. In fact, you can choose which FTA you wish to trade under depending on what is most advantageous. The AANZFTA will, however, mean that Australian businesses already trading with Singapore, Thailand and New Zealand can make use of the AANZFTAs regional ROO under the agreement’s tariff commitments, making it easier to do business in and with the ASEAN region as a whole. The variables that come into play in switching between FTAs does mean greater complexity in developing a coherent export strategy into the region, making added caution essential.

Want to know more?

Australian Business International Trade Services can provide all your AANZFTA export documentation and market development requirements. We will be offering a range of workshops in 2010 covering topics including export documentation, strategies for developing ASEAN export markets, importing under the AANZFTA, and identifying the right ASEAN supplier. For more information, download our ASEAN brochure.

To find out more and ensure you maximise your competitive advantage, register your interest now.

Click here for a list of “ASEAN Made Easy” workshops throughout Sydney, the ACT and the Central Coast.

For more information or assistance, please contact Australian Business International Trade Services on 1800 505 529 or email Ian at ian.bennett@australianbusiness.com.au.

 
 

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Time has Come to Cash in on Regionalism


On January 10th 2010 the Australia-ASEAN-New Zealand Free Trade Agreement (AANZFTA) came into effect. It is a Free Trade Agreement between Australia, ASEAN and New Zealand that will create a common market by eliminating between 90-100% of tariff barriers within the region. It covers the substantial reduction or elimination of tariffs on Australian products including livestock, produce, resources, pharmaceuticals, clothing and footwear, machinery and some services and the movement of people. 

The reductions are gradual and will be completed by 2020. At that time both Australia and New Zealand would have eliminated 100% of tariffs in the region. The region’s growing importance to Australia cannot be overstated. At present the ASEAN market covers 20% of Australia’s two-way trade, a figure that is growing 10% annually. 

Australia’s ambitions in the region have not been a secret. Kevin Rudd has long been an advocate for the Asia Pacific Community, in contrast to the U.S-centred Howard years. The AANZFTA finally gives teeth to Rudd’s continued rhetoric and will lead to the integration so desired. If all goes to plan, the fundamental way in which it will do so is through the rules of origin (ROO) requirements impact on the supply chain. 

The ROO outlines the amount of the final product that has to originate from the exporting country in order to fall under the agreement. In a bilateral agreement this simply means that the majority of components (or X%) must come from the exporting country. The beauty of a regional agreement is that the majority of components (or X%) can come from any one of the countries party to the agreement. It therefore acts as an incentive for businesses to seek inputs regionally furthering integration and potentially reducing transportation costs. 

Sound complicated? It may be, but it pales in comparison to the ‘Noodle Bowl’ of bilateral agreements that has now taken hold in Asia. While the AANZFTA makes flexibility of the ROO a clear priority it is operating on a backdrop of 167 separate bilateral agreements in the wider Asian region. The motivation for such agreements is clear: while many multilateral negotiations have collapsed, Asia is the backbone of global economic growth and stands to gain enormously from intra-Asian trade. But is this motivation misguided? Each agreement requires time, money, bureaucracy and paperwork to get off the ground. Multiply this by 167 and is trade easier or more liable to distortion? The most likely outcome is that businesses just won’t bother. 

But this doesn’t concern us – or does it? The message is clear. Australian businesses are in prime position to gain from regionalism. By engaging with ASEAN as a region Australia bypasses the ‘Noodle Bowl’ scenario for now. As far as Australia’s other trading partners go – let’s just say that noodles are not off the menu entirely. 

Amy Doyle – International Market Analyst 

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Want more information on ASEAN? download our ASEAN brochure  

Amy Doyle – International Market Analyst

For more information or assistance, please contact Australian Business International Trade Services on 1800 505 529 or email Ian at ian.bennett@australianbusiness.com.au.

 
 

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