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1. What are the main contents of the China-Australia Free Trade Agreement (the "ChAFTA")?
2. When was the ChAFTA officially signed?
3. When will the ChAFTA come into force?
4. What has the ChAFTA experienced during a decade of negotiations?
5. What efforts have Australia and China made from the substantive conclusion of the negotiations to the formal signing of the ChAFTA?
6. What is the important significance of the signing of the ChAFTA?
7. Compared with other free trade agreements signed by China, what are the main characteristics of the ChAFTA?
8. Why should China negotiate and sign the ChAFTA with Australia?
9. What influence will the ChAFTA have on bilateral economic and trade relations?
10. What roles will the ChAFTA play in the economic integration in the Asia-Pacific region?
11. What liberalization level has the ChAFTA generally reached in the area of trade in goods?
12. What are the highlights of the ChAFTA compared with the free trade agreements having recently signed by Australia with Japan and South Korea?
13. What specific arrangements have been made in respect of tariff reduction period?
14. What is the specific level of trade liberalization of the ChAFTA on industrial products?
15. Which industrial sectors of China may benefit more from the ChAFTA?
16. What liberalization level has the ChAFTA reached in the area of agricultural products?
17. How does the ChAFTA handle the issues concerning the trade liberalization of sensitive products of China and Australia?
18. What industries and products of China may be challenged by the ChAFTA?
19. What changes will take place in the life of ordinary people thanks to the ChAFTA?
20. What important breakthroughs have been made by the ChAFTA in the area of trade in services?
21. What achievements have been made by the ChAFTA in the area of service?
22. What are the specific contents of the convenience provided by the ChAFTA for Chinese enterprises to "Go Out"?
23. What favorable conditions has the ChAFTA created for the Chinese youth to go to Australia?
24. What "Green Channel" has the ChAFTA pioneered for professionals with Chinese characteristics to go to Australia?
25. What benefits will the ChAFTA bring to overseas study for Chinese students?
26. Under the framework of the ChAFTA, what kinds of cooperation will be carried out by China and Australia in the financial sector?
27. How will the ChAFTA further promote the liberalization level of bilateral trade in services?
28. The ChAFTA includes part of autonomous and open measures of China taken in the China (Shanghai) Pilot Free Trade Zone (the "SHFTZ"). Can you tell us about the relevant situation?
29. Is the ChAFTA making pre-arrangements for "upgraded" negotiations between China and Australia in the future?
30. After the conclusion of the ChAFTA, domestic service industry may encounter some shocks and challenges. Do you have any comments on this?
31. It can be noted that Australian service providers will be allowed to establish foreign-invested or sole for-profit pension institutions in China. How do you interpret the open measure?
32. In the ChAFTA, traditional Chinese medicine services "Going out" have made a series of achievements. Can you tell me about the relevant situation?
33. At present, what is the current situation of bilateral investment? What influence will the signing of the ChAFTA have on bilateral investment?
34. What are the main contents of the ChAFTA in the area of investment?
35. The ChAFTA stipulates that China and Australia will carry out the second-phase negotiations in respect of issues concerning investment. How about the specific situation?
36. What are the main contents of the Investment-specific State to State Dispute Settlement (ISDS) of investors and host countries included in the ChAFTA? What significance do they have in Chinese enterprises?
37. What are the main contents of the ChAFTA in the part of rules?
38. What highlights does the ChAFTA have in terms of rules of origin?
39. What convenient arrangements has the ChAFTA made for enterprises of China and Australia in respect of performing customs procedures?
40. What provisions has the ChAFTA specified in respect of animal and plant inspection and quarantine and technical barriers to trade?
41. After the ChAFTA comes into force, if large quantities of Australian imports have an impact on China's domestic industries, are there countermeasures and protective measures?
42. What are the main contents of the ChAFTA in the area of intellectual property?
43. Does the ChAFTA involve in competition issues? What are the main contents?
44. Does the ChAFTA involve in electronic commerce? What are the main specific provisions? What effects will have on enterprises?
45. Under the ChAFTA, do China and Australia have a special mechanism for how to deal with trade disputes? What effects will have on enterprises?
1. What are the main contents of the China-Australia Free Trade Agreement (the "ChAFTA")?
Answer: The China-Australia Free Trade Agreement (the “Agreement”) includes the text and four annexes. In addition to the Preamble, the text consists of 17 chapters, which include Initial Provisions and Definitions, Trade in Goods, Rules of Origin and Implementation Procedures, Customs Procedures and Trade Facilitation, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Trade Remedies, Trade in Services, Investment, Movement of Natural Persons, Intellectual Property, Electronic Commerce, Transparency, Institutional Provisions, Dispute Settlement, General Provisions and Exceptions and Final Provisions, and are attached by 11 annexes. Four annexes attached to the ChAFTA are Elimination of Customs Duties for Trade in Goods, Product Specific Rules of Origin, Elimination of Customs Duties for Trade in Services and 5 Side Letters on skills assessment, financial services, education services, legal services and the Rules on Transparency in Treaty-based Investor-State Arbitration.
In addition to the text and annexes of the ChAFTA, package achievements of negotiations of the ChAFTA also includes two memorandums of understanding of the Government of Australia and the Government of the People’s Republic Of China on the Investment Facilitation Arrangement (IFA) and the Work and Holiday Visa Arrangement as well as cooperative side letters on the Traditional Chinese Medicine Services. The above three documents are simultaneously signed with the ChAFTA.
2. When was the ChAFTA officially signed?
Answer: On June 17, 2015, Mr. Gao Hucheng, the Minister of Commerce of the People’s Republic of China, and Andrew Robb, the Minister for Trade and Investment of Australia, on behalf of their respective governments, officially signed the Free Trade Agreement between the Government of Australia and the Government of the People’s Republic of China in Canberra, Australia. Chinese President Xi Jinping and Australian Prime Minister Tony Abbott exchanged congratulatory letters on the official conclusion of the ChAFTA on that day.
3. When will the ChAFTA come into force?
Answer: After the ChAFTA is officially signed, China and Australia will respectively perform their domestic approval procedures. After the completion of the approval procedures, the two governments will determine the specific effective time and exchange notes through diplomatic channels so as to make the ChAFTA enter into force as soon as possible.
4. What has the ChAFTA experienced during a decade of negotiations?
Answer: From the launch in April 2005 to the announcement of the conclusion of substantive negotiations by the leaders of China and Australia in November 2014, 21 rounds of negotiations and dozens of small-scale consultations for the ChAFTA have been carried out.
In October 2003, China and Australia signed the Trade and Economic Cooperation Framework between the People’s Republic of China and Commonwealth of Australia and decided to carry out a joint feasibility study in free trade areas. In March 2005, the joint study was completed and the China-Australian Free Trade Zone was deemed feasible and would bring real benefits to China and Australia on the whole. As a result, negotiations were officially launched in April. From May 2005 to July 2013, China and Australia held 19 rounds of talks in total. Although great progress has been made, no breakthroughs in difficult issues were made.
In April 2014, the President Xi Jinping and the Premier Li Keqiang separately met with Australian Prime Minister Abbott who was visiting China. Leaders of China and Australia reached important consensus on accelerating the negotiating process and striving to reach an early agreement. As a result, the negotiations appeared positive momentum. Thereafter, delegations of both parties carry out continuous and intensive consultations including the 20th round and the 21st round of negotiations. Trade ministers of China and Australia agreed on practically advance the negotiations. As a result, the pace of the negotiations is continually accelerated and the differences between both parties are gradually narrowed. From October to November, delegations of both parties conducted negotiations at the final critical stage. After the work around the clock for more than 20 days, the agreement on the entire contents was finally reached.
On November 17, the President Xi Jinping, together with the Prime Minister Abbott, confirmed and announced the substantive conclusion of negotiations on the ChAFTA when he paid a state visit to Australia. Witnessed by the leaders of China and Australia, Gao Hucheng, the Minister of Commerce of the People’s Republic of China, and Andrew Robb, the Minister for Trade and Investment of Australia, signed the Declaration of Intent of the Government of Australia and the Government of the People’s Republic of China on Substantial Conclusion of Negotiations on the China-Australia Free Trade Agreement. So far, nearly a decade of negotiations have come to an end.
5. What efforts have Australia and China made from the substantive conclusion of the negotiations to the formal signing of the ChAFTA?
Answer: On November 17, 2014, the President Xi Jinping, together with the Prime Minister Abbott, confirmed and announced the substantive conclusion of negotiations on the ChAFTA when he paid a state visit to Australia. Delegations of Australia and China then immediately started to check and confirm the achievements of negotiations and legally examine and approve the texts of the ChAFTA. On February 5, 2015, the check and the confirmation of all achievements of the negotiations were completed and delegations of China and Australia initialed the achievements of the negotiations. In June, the examination and the approval of all the legal texts in Chinese and English of the ChAFTA came to an end and both parties also completed their domestic procedures for the formal signing of the ChAFTA. All preparations for the formal signing of the ChAFTA between the two countries have been made.
6. What is the important significance of the signing of the ChAFTA?
Answer: The ChAFTA has achieved the objective for a comprehensive and high-standard agreement with balanced interests, which has very important significance.
The ChAFTA is an important decision made by the Party Central Committee and the State Council to implement the opening strategy and an important and solid step to carry out arrangements of the 3rd Plenary Session of the 18th CPC Central Committee, to build a new open economic system and to construct global-oriented and high-standard free trade area network. The signing of the ChAFTA indicates that China has full confidence and ability to establish closer trade relations with all trading partners and will continue to unswervingly deepen the reform and promote the opening-up. The ChAFTA will also comprehensively enhance bilateral economic and trade cooperative relations, further facilitate flows of funds, resources and persons of China and Australia, drive complementary economic advantages of China and Australia in a lasting and deep manner and widely benefit producers and consumers of China and Australia. According to the preliminary forecast of Australian Centre for International Economic Research, the ChAFTA will boost the Australian GDP at 0.7% and the China's GDP at 0.1%.
In addition, both China and Australia are great powers in the Asia-Pacific region and the world's major economies. The conclusion of the ChAFTA lays a solid foundation for the process of building the Asia-Pacific Free Trade Area (APFTA) decided to be launched by the 22nd APEC Economic Leaders Meeting last year and plays an active role in practically promoting the economic integration process in the Asia-Pacific region and achieving lasting stability and prosperity.
7. Compared with other free trade agreements signed by China, what are the main characteristics of the ChAFTA?
Answer: The ChAFTA is the first free trade agreement concluded by China with major developed economies with large economic aggregates and is also one of the most progressive free trade agreements in trade and investment liberalization that have ever been signed by China and other countries. In the area of trade in services, Australia is the first country to make commitments to China on trade in services in a negative-list approach. The IFA is the first special facilitation arrangement that developed countries make for engineers and technicians under Chinese investment. Australia is not only the second country that makes commitments to China on the Work and Holiday Visa Arrangement and professionals with Chinese characteristics through the negotiations on the ChAFTA around the world, but also the developed country that accepts the largest number of the relevant people with the right of admission.
8. Why should China negotiate and sign the ChAFTA with Australia?
Answer: As China's important trade and investment partner, a western developed economy with GDP ranking No. 12 worldwide and an important member of the OECD and G20, Australia has a mature market economy and the supporting legal system and governance model and has an important influence in the Asia-Pacific region and the world. At present, China is Australia's largest partner of trade in goods, the largest source of imports and the largest destination of exports. Australia is the second largest destination, after Hong Kong, for China's overseas investment. Highly complementary economy of China and Australian shows a great potential of cooperation in mineral energy, agricultural, industrial and other areas. Conclusion of the ChAFTA contributes to closer trade and investment relations between China and Australia and better achievement of mutual benefit and win-win situation.
9. What influence will the ChAFTA have on bilateral economic and trade relations?
Answer: The ChAFTA has significantly lowered the threshold for bilateral trade and investment and has made more open, convenient and standard institutional arrangements for the future development of bilateral economic and trade relations. It helps tap the potential of bilateral cooperation in depth, further promote the bidirectional flows of funds, resources and persons, comprehensively promote and deepen bilateral economic and trade relations and enhance the level of cooperation to provide important contents to enrich the comprehensive strategic partnership of China and Australia.
10. What roles will the ChAFTA play in the economic integration in the Asia-Pacific region?
Answer: The 22nd APEC Economic Leaders Meeting decided to launch the process of building the Asia-Pacific Free Trade Area (APFTA). As both China and Australia are important countries in the Asia-Pacific region, the ChAFTA will provide a solid basis for the Asia-Pacific Free Trade Area and help promote the economic integration process in the Asia-Pacific region as well as deeper integration and common development of the Asia-Pacific economies.
11. What liberalization level has the ChAFTA generally reached in the area of trade in goods?
Answer: The ChAFTA shows a substantially high liberalization level in trade in goods. 96.8% of tariff lines of China will be liberalized by such a straightforward way as linear tariff reduction. Among them, the tariffs of 95% of tariff lines will be reduced within five years and the tariff reduction transition period of the remaining products will not exceed 15 years. All products of Australia are completely tariff-free for China and the liberalization level reaches 100%. Among them, tariffs of 91.6 percent of tariff lines will be reduced to zero at the time of entry into force of the ChAFTA, those of 6.9 percent of tariff lines will be reduced to zero at the third year after the ChAFTA enters into force and those of the remaining tariff lines will be reduced to zero at the fifth year after the ChAFTA enters into force.
From the point of view of trade volume, the volume of liberalized imports of China from Australia accounts for 97% of total volume of liberalized imports from Australia. Among them, the volume of imports of which tariffs will be reduced to zero at the time of entry into force of the ChAFTA accounts for 85.4% and that of imports of which tariffs will be reduced to zero within 5 years accounts for 92.8%. The volume of imports of Australia from China of which tariffs will be reduced to zero at the time of entry into force of the ChAFTA also accounts for 85.4% of total volume of liberalized imports from China and the volume of imports of which tariffs will be reduced to zero within 3 years accounts for 98.4%. Tariffs of all products will be reduced to zero within 5 years.
12. What are the highlights of the ChAFTA compared with the free trade agreements having recently signed by Australia with Japan and South Korea?
Answer: Compared with the Japan-Australia Free Trade Agreement and the Korea-Australia Free Trade Agreement, Australia's liberalization arrangements for Chinese products are superior to those for Japanese and Korean products, which is mainly reflected by the facts that tax reduction period for Chinese products does not exceed 5 years while that for Japanese and Korean products 8 years; among Australia's products subject to tariff reduction through tariff reduction period, the proportion of tariff lines subject to 3-year tariff reduction period is higher than that of the similar products in the Japan-Australia Free Trade Agreement and the Korea-Australia Free Trade Agreement.
The longest tariff reduction period of China for Australian products is shorter than that for Japanese and South Korean products. The longest tariff reduction period of China is 15 years, while that of Japan is 16 years and that of South Korean is 20 years. In addition, all products of China subject to tariff reduction through tariff reduction period have taken such a straightforward tariff reduction way as linear tariff reduction. In addition to linear tariff reduction, Japan also has the way of postponed tariff reduction and South Korea has such complex ways as partial tariff reduction and seasonal tariff reduction.
13. What specific arrangements have been made in respect of tariff reduction period?
Answer: In the ChAFTA, tariffs of Australia will be reduced in the following three ways: First, tariffs have been zero or will be immediately reduced to zero at the time of entry into force of the ChAFTA; second, tariffs will be reduced to zero at the third year after the ChAFTA enters into force; and third, tariffs will be reduced to zero at the fifth year after the ChAFTA enters into force. The tariff lines subject to the above tariff reduction ways respectively accounts for 91.6%, 6.9% and 1.5% of total tariff lines of Australia and the volume of imports of the relevant products of Australia from China respectively accounts for 81.5%, 16.9% and 1.6% of total volume of imports from China.
Tariffs of China will be reduced in the following five ways: First, tariffs have been zero or will be immediately reduced to zero at the time of entry into force of the ChAFTA; the proportion of tariff lines subject to tariff reduction in this way is 29.2% and the proportion of the corresponding volume of imports from Australia accounting for total volume of imports from Australia (hereinafter referred to as the "proportion of volume of imports") is 85.3%. Second, tariffs will be reduced to zero through tariff reduction period for 3 years, 5 years, 6 years, 8 years, 9 years, 10 years, 12 years or 15 years; the proportion of tariff lines subject to tariff reduction in this way is 67.6% and the proportion of volume of imports is 8.7%. Third, tariffs will be reduced to zero through tariff reduction period with special safeguard measures taken; the proportion of tariff lines subject to tariff reduction in this way is 0.1% and the proportion of volume of imports is 0.9%. Fourth, country and tariff quota products are implemented; the proportion of tariff lines subject to tariff reduction in this way is 0.1% and the proportion of volume of imports is 2.1%. Fifth, exceptional products, namely they are not subject to tariff reduction; the proportion of tariff lines subject to tariff reduction in this way is 3.1% and the proportion of volume of imports is 3%.
14. What is the specific level of trade liberalization of the ChAFTA on industrial products?
Answer: In the ChAFTA, trade in industrial products has reached a high liberalization level. For industrial products of China, the proportion of product tariff lines of which tariffs have been zero or will be immediately reduced to zero at the time of entry into force of the ChAFTA and the volume of imports from Australia are respectively 32.4% and 92.9%; the proportion of tariff lines of industrial products of which tariffs have been zero through tariff reduction period and the volume of imports are respectively 65.1% and 7%; for 171 tariff lines of industrial products of which tariffs will not be reduced, the proportion of tariff lines are 2.5% and the proportion of the volume of imports is only 0.1%. After the implementation of the ChAFTA, average tariff rate for industrial products of China will be reduced from 8.8% to 0.2% and the maximum tariff from 47% to 20%.
For industrial products of Australia, the proportion of product tariff lines of which tariffs have been zero or will be immediately reduced to zero at the time of entry into force of the ChAFTA and the volume of imports from China are respectively 89.9% and 81%; the proportion of tariff lines of industrial products of which tariffs will be reduced to zero at the third year after the ChAFTA enters into force and the volume of imports are respectively 8.2% and 17.3%; and the proportion of tariff lines of industrial products of which tariffs will be reduced to zero at the third year after the ChAFTA enters into force and the volume of imports are respectively 1.9% and 1.7%.
15. Which industrial sectors of China may benefit more from the ChAFTA?
Answer: Industrial sectors of China may benefit from the ChAFTA in terms of tariff reduction and exemption as well as trade creation. In terms of tariff reduction and exemption, it is estimated that the implementation of the ChAFTA will make China obtain tariff reduction and exemption of USD 1.66 billion for products exported to Australia. China will obtain tariff reduction and exemption of USD 1.02 billion (representing 61.5% of total reductions and exemptions) when the ChAFTA enters into force and will obtain tariff reduction and exemption of USD 1.6 billion (representing 96.4% of total reductions and exemptions) with 3 years after the ChAFTA enters into force. China's products subject to large sums of tariff reductions and exemptions mainly include garment and leather, electronic and mechanical products, other manufactured goods, steel and metal, and chemical products with amounts of tariff reductions and exemptions of USD 1.53 billion (accounting for 91.9 percent of total reductions and exemptions).
In terms of trade creation, after the implementation of the ChAFTA, the proportion of China's exports to Australia accounting for China's total exports is expected to increase from 1.7% to about 2.1%. Products with the potential of significant increase in China's exports mainly include textiles, garment, leather products, electrical and mechanical equipment, steel and metal products, mineral products, chemical products and transport equipment, etc.
16. What liberalization level has the ChAFTA reached in the area of agricultural products?
Answer: According to the arrangements of the ChAFTA and supported by moderate and reasonable protection, agricultural products of China and Australia has achieved a high level of liberalization. After the end of the tariff reduction transitional period, average tariffs of agricultural products of China will decrease from 12.94% before the implementation of the ChAFTA to 0.51% and tariffs of products accounting for 93.7 percent of tariff lines of agricultural products will be zero. 99.4% of agricultural products of Australia will be zero immediately after the entry into force of the ChAFTA. The volume of such agricultural products of Australia accounts for 99% of total volume of agricultural products imported from Australia and the remaining products will complete all the process of liberalization within three years.
17. How does the ChAFTA handle the issues concerning the trade liberalization of sensitive products of China and Australia?
Answer: China and Australia have their own sensitive products. For China, the strong agricultural competitiveness of Australia will bring some competitive pressures to partial agricultural products of China. In this regard, by setting a longer tariff reduction period and being supplemented by special safeguard measures as well as country quotas and other special arrangements, China provides the related industries with some protection and implements moderate opening-up. In addition, China also makes exceptional arrangements for grain, cotton, vegetable oil, sugar and other products, which are not subject to tariff reduction.
For Australia, due to the relative competitiveness of industrial products of China, Australia sets a three-year or five-year tariff reduction period for some sensitive industrial products to provide a certain grace period for the related industries.
18. What industries and products of China may be challenged by the ChAFTA?
Answer: Australia is an agricultural power and the world's leading agricultural producer and exporter. There is a gap in the competitiveness of agricultural products between China and Australia. For the agricultural industry, the ChAFTA moderately protect key agricultural products by exceptions of partial products, by arranging a long transition period and by setting special safeguard measures and country quota measures for agricultural products. Hence, a long time is available for the adjustments and countermeasures of the relevant domestic industries. Meanwhile, in the spirit of "promoting reform with openness", China will promote the development of domestic industries and constantly improve the competitiveness.
19. What changes will take place in the life of ordinary people thanks to the ChAFTA?
Answer: With the implementation of the ChAFTA, the masses will get more high-quality imported sources, such as beef and mutton, dairy products, wine, lobster, fruit and other consumer goods, so differential choices of high-end products will be better met.
20. What important breakthroughs have been made by the ChAFTA in the area of trade in services?
Answer: The ChAFTA is the first high-level free trade agreement signed by China and main western developed countries. Both parties have made high-level achievements of negotiations in the service sector. The level of openness of Australia to China's services is higher than that of the Japan-Australia Free Trade Agreement and the South Korea-Australia Free Trade Agreement recently reached. Main breakthroughs are reflected in the following three aspects:
First, the ChAFTA is an agreement where the first partner makes opening commitments on trade in services in a negative-list approach. Australia has agreed to open its service sectors in a negative-list approach and becomes the first country that makes commitments on trade in services to China in a negative-list approach. China, based on its WTO accession commitments, will open part of its service sectors in a positive-list approach.
Second, major breakthroughs have been made on personnel exchanges of both parties. Australia has agreed to establish an investment facilitation mechanism to specifically provide a "Green Channel" for applying for Australia visa and work permits for engineers and technicians under the Chinese investment so as to promote investment activities of Chinese enterprises in Australia. The mechanism is the first special facilitation arrangement that developed countries make for China in the area. Australia will work and holiday visas to 5,000 young persons from China every year through "Work and Holiday Visa Arrangement" to promote the exchanges of young persons between China and Australia. Australia will also offer an annual entry quota of 1,800 people for occupations with Chinese characteristic, including TCM practitioners, Chinese language teachers, Chinese chefs and martial arts coaches.
Third, pre-arrangements have been made for "upgrading" the opening of bilateral trade in services. Both[FS:Page] parties agreed that, after the implementation of the ChAFTA, they will carry out negotiations on trade in services in a negative-list approach within the time negotiated by them in the future to advance the achievement of a higher level of openness.
In addition, both parties also reached a series of important consensuses on the cooperation in such key service areas as finance, education, law and traditional Chinese medicine.
21. What achievements have been made by the ChAFTA in the area of service?
Answer: In recent years, Sino-Australian trade in services has been developing rapidly. In 2014, the total amount of Sino-Australian trade in services amounted to US$16.715 billion. Particularly, China's service exports to Australia reached US$3.665 billion, while Australia’s service exports to China reached US$13.05 billion.
In respect of the area of services, the opening commitments made by both parties in many service sectors in the ChAFTA have reached a high level in respective free trade agreements. The opening commitments made by Australia for China are higher than those in the free trade agreements signed by and between Australia and South Korea and between Australia and Japan, while China’s commitments are also higher than those in other free trade agreements (except CEPA and ECFA).
As for specific achievements, in respect of structure, the ChAFTA mainly includes service chapter, financial appendix, natural person movement chapter, the appendix about specific commitments on natural person movement, the table of concession of China’s specific commitments, the negative list of Australia’s non-conforming measures, the cooperative side letters in five fields and two memorandums of understanding.
In terms of contents, the ChAFTA has the following highlights: firstly, Australia opens service sectors in the form of a negative list, and provides China with the all-round most-favored-nation treatment, except a few fields; secondly, Australia specially establishes a convenience mechanism for engineers and technicians under Chinese investment to go to Australia, in a bid to promote Chinese enterprises to conduct investment activities in Australia. The said mechanism is the first special facilitation arrangement made by a developed country for China, and is helpful for relieving the shortage of Chinese labors in Australia, high labor costs and other pressures; thirdly, Australia unilaterally provides work and holiday visas for 5,000 Chinese youth to go to Australia each year, who can thereby reside in Australia for 12 months; fourthly, Australia provides 1,800 entry quotas for professionals with Chinese characteristics (such as traditional Chinese medicine practitioners, Mandarin language tutors, Chinese chefs and Wushu martial arts coaches) each year, who can thereby stay in Australia for 4 years for the first time, and may extend the term of stay upon expiration; fifthly, as required by China, Australia commits to reduce the required liquidity coverage ratio of branches of foreign banks from 100% to 40%, so the capital costs of branches of Chinese banks in Australia will be declined notably.
On the basis of Chinese WTO commitments, China commits to further open some service sectors for Australia in the form of positive list, and takes some autonomous and open measures of China (Shanghai) Pilot Free Trade Zone. In future, in the period to be agreed upon by both parties, China will conduct and complete as soon as possible negotiations about the trade in services with Australia in the form of negative list. Therefore, China and Australia have made “full flowering” fruitful achievements in the area of service in the ChAFTA!
22. What are the specific contents of the convenience provided by the ChAFTA for Chinese enterprises to "Go Out"?
Answer: Australia is an important market for Chinese enterprises to “go out”. According to statistics, in 2013, China’s direct investments in Australia totalled US$17.45 billion, up by 25.8% as compared with 2012. In order to realize further mutual beneficial cooperation and win-win development, China and Australia, under the framework of the ChAFTA, entered into the Memorandum of Understanding on Investment Facilitation Arrangement with the aim to provide some visa facilitation arrangements for relevant persons of Chinese enterprises investing in Australia. Persons engaged in large investment and engineering projects in such fields as of food and agriculture, resources and energy, transportation, telecom, power supply and generation, environment and tourism will obtain conveniences for going to Australia, which will be helpful for Chinese enterprises to give full play to competitive edges in Australia.
In future, China will negotiate with Australia according to pre-establishment national treatment together with the mode of negative list, so as to further enhance investment liberalization and facilitation; and, adopt the Investment-specific State to State Dispute Settlement of investors and host countries to provide comprehensive right guarantee and relief channels for Chinese and Australian investors.
23. What favorable conditions has the ChAFTA created for the Chinese youth to go to Australia?
Answer: Under the framework of the ChAFTA, China and Australia have arrived at the Memorandum of Understanding on Work and Holiday Visa Arrangement. According to the said arrangement, Australia will provide opportunities of travel and short-term work in Australia for 5,000 Chinese youth aged 18-30 each year. As a result, Chinese youth will get a fourth choice in addition to overseas study, work and travel for going to Australia. It will not only be helpful for the Chinese youth to realize the overseas study dream, but also strengthen cultural exchanges between the youths and promote the development of relations between the two countries.
24. What "Green Channel" has the ChAFTA pioneered for professionals with Chinese characteristics to go to Australia?
Answer: According to contents of the ChAFTA, Australia commits to provide 1,800 entry quotas for traditional Chinese medicine practitioners, Mandarin language tutors, Chinese chefs and Wushu martial arts coaches each year, facilitating them in going to Australia. With typical careers with Chinese characteristics, such Chinese service providers have significant advantages in these services. The ChAFTA will push such service providers to go out to present charms of Chinese traditional cultures to the whole world.
25. What benefits will the ChAFTA bring to overseas study for Chinese students?
Answer: Australia is a power of education services. As specified in the ChAFTA, China will examine, assess and announce, at the foreign education regulation website of the Ministry of Education, the list of colleges under Australian federal government recruiting overseas students and 77 Australian higher education institutions registered with the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS). This arrangement will be helpful for Chinese overseas students to get accurate and authoritative information on Australian education services in a timely way.
Besides, China and Australia determine to expand and deepen further cooperation in respect of education services between them. Australia will provide China with the detailed information on relevant regulation decisions for the Australian higher education institutions registered with the CRICOS, further enhancing the transparency of relevant conditions of these institutions and practically protecting rights and interests of Chinese overseas students to go to Australia. Meanwhile, Australia welcomes Chinese education institutions to establish Chinese international schools in Australia.
To sum up, the ChAFTA has deepened the cooperation and win-win of both parties in the education sector, and created favorable conditions for exchanges of teachers and students of the two countries.
26. Under the framework of the ChAFTA, what kinds of cooperation will be carried out by China and Australia in the financial sector?
Answer: Finance is one of the primarily cooperation sectors of China and Australia. Under the framework of the ChAFTA, both parties unanimously agree to carry out dialogues and cooperation about issues of common interest including banking, securities and anti-money laundering in future. For example, for Chinese persons nominated to work as “responsible managers” of Australian branches or sub-branches of Chinese-funded banks, Australia will facilitate managers of the Chinese-funded banks in going to Australia to conduct business in combination with relevant requirements and in view of relevant qualifications and experience obtained by the Chinese persons in China. On the basis of national treatment, Chinese institutions may provide payment services in Australia in the capacity of a member of a payment system and an operator of a payment system. All of these will create a good business environment for Chinese financial institutions to “go out”.
The successful conclusion of the ChAFTA has provided a good opportunity for the closer cooperation between the financial sectors of the two countries and created a new situation of mutual benefits and win-win.
27. How will the ChAFTA further promote the liberalization level of bilateral trade in services?
Answer: Recently, the economic and trade relations between China and Australia have become closer. In particular, the scale of trade in services between the two countries expanded from US$8.443 billion in 2008 to US$16.716 billion in 2014, with an average annual growth rate of 14%. The successful conclusion of the ChAFTA will further enhance the liberalization level of bilateral trade in services and inevitably drive the bilateral economic and trade relations to develop to a higher level.
28. The ChAFTA includes part of autonomous and open measures of China taken in the China (Shanghai) Pilot Free Trade Zone (the "SHFTZ"). Can you tell us about the relevant situation?
Answer: The SHFTZ is a forward position of China’s reform and opening up. The inclusion of part of autonomous and open measures taken in the SHFTZ into the ChAFTA embodies the “reproducibility and generalizability” of reform experience. In the sector of trade in services in the ChAFTA, some open measures taken in the SHFTZ in respect of such sectors as of telecom, law, construction and maritime transport are included, which not only has created more market opportunities for Australian service providers, but also will provide China with valuable experience in reform experiment under control.
29. Is the ChAFTA making pre-arrangements for "upgraded" negotiations between China and Australia in the future?
Answer: After validation of the ChAFTA, both parties will start the next round of negotiations about the trade in services in the form of negative list and complete them as soon as possible within the agreed time. This will powerfully carry out the deployments of the Central Committee of the Communist Party of China and the State Council on further deepening reform. The negotiations about the trade in services in the form of negative list are helpful for realizing a higher liberalization level of China’s service industry, adapting to the new trend of economic globalization, promoting the orderly and free flows of international and domestic factors, efficient resource allocations and deep market integration, and providing more market opportunities for foreign service providers.
30. After the conclusion of the ChAFTA, domestic service industry may encounter some shocks and challenges. Do you have any comments on this?
Answer: Both parties have achieved high-level negotiation results with mutual benefits in the sector of the trade in services. The service industry of Australia, as a developed country, has a higher development level. After validation of the ChAFTA, Australian service providers will have more opportunities to get access to the Chinese market, which will not only enable Chinese people to experience quality and efficient services, but also provide more cooperation opportunities for the development of China’s service industry to a certain extent. For example, the reinforced cooperation between both parties in the education sector will provide more solid, smooth and expansive bases for Chinese overseas students to study in Australia; the inclusion of some open measures of China into the ChAFTA will play a role of “experimental field” for further opening up of China in future.
31. It can be noted that Australian service providers will be allowed to establish foreign-invested or sole for-profit pension institutions in China. How do you interpret the open measure?
Answer: In September 2013, the State Council issued the Several Opinions on Accelerating the Development of Pension Service Industry, under which it is proposed to comprehensively establish a pension service system based on living at home, relied on communities and supported by institutions, with improved functions and a proper scale and covering urban and rural areas by 2020. In particularly, it is clearly stipulated that the construction of pension institutions will be vigorously strengthened, and foreign investments in the pension service industry will be encouraged. In our opinion, advanced countries including Australia have rich experience in the development of the pension service industry. The permission of establishment of pension institutions by such countries may not only meet demands of some domestic consumers for high-end pension services, but also is helpful for relevant domestic service providers to absorb advanced management and service philosophies of foreign investors, and for promoting the improvement of service quality and level of China’s pension industry.
As a developed country, Australia has a relatively sound pension system. Governments, non-profit institutions and commercial enterprises are participators of pension services, have advanced service philosophies and management experience, and play different roles. The permission for Australian service providers to establish foreign-invested or sole for-profit pension institutions in China under the ChAFTA is helpful for impelling the steady development of domestic pension industry and better meeting demands of the masses for pension services.
32. In the ChAFTA, traditional Chinese medicine services "Going out" have made a series of achievements. Can you tell me about the relevant situation?
Answer: As the traditional Chinese medicine is an important carrier of traditional Chinese cultures, the vigorous implementation of the trade in traditional Chinese medicine services is an important task of comprehensively developing the traditional Chinese medicine business. Upon hard negotiations, China has made a series of achievements in the “going out” of traditional Chinese medicine services, providing beneficial reference to China’s future conclusion of other free trade agreements and expansion of overseas traditional Chinese medicine service markets. Specifically, it is the first time for Australia to provide 1,800 entry quotas for professionals with Chinese characteristics (traditional Chinese medicine practitioners, Mandarin language teachers, Chinese chefs and Wushu martial arts coaches) each year in the free trade agreements concluded by it with other countries, and the quotas may be allocated among these four types of professionals; Australia agrees to make legally binding commitments concerning the cooperation with China concerning the trade in traditional Chinese medicine services in the form of articles of agreement; besides, both parties determine to enter into side letters as an important part of a package of achievements of the ChAFTA, in a bid to enhance the operability of the cooperation between the two countries in traditional Chinese medicine services and the trade in traditional Chinese medicine, encourage and support the cooperation in R&D of traditional Chinese medicine, propel relevant professional institutions and registration departments of the two countries to strengthen communications, and promote the two parties’ information exchanges about policies, regulations and measures about the traditional Chinese medicine.
33. At present, what is the current situation of bilateral investment? What influence will the signing of the ChAFTA have on bilateral investment?
Answer: Australia is the second largest destination of China’s overseas investments, second only to Hong Kong. In recent years, the investments by Chinese enterprises in Australia have been growing rapidly. The amount of China’s direct investments in Australia rose from US$587 million in 2005 to US$3.458 billion in 2013, with the average annual growth rate of 54.3%. By the end of 2014, China’s various investments in Australia have accumulatively amounted to US$74.94 billion, including accumulative direct investments of US$19.95 billion. Chinese enterprises invest in Australia primarily in resource and energy industries such as mining and oil and gas development industries. Particularly, the investments in mining industry account for 2/3.
During 2002-2012, Australia’s actual investments in China totalled US$4.72 billion, and the number of investment projects accumulatively reached 5,442. In 2013, Australia newly established 225 enterprises in China, with foreign capital of US$330 million actually used. By the end of April 2014, Australia has accumulatively invested and established 10,428 enterprises in China, with accumulative foreign capital of US$7,595 million actually used.
A high level of investment opening commitments of both parties will play an active role in maintaining the current investment development momentum of both parties and expanding new investment fields, and will be helpful for the further development of bilateral investments of both parties. Especially, that Australia relaxes the examinations for the investments by Chinese non-government investors will vigorously push forward Chinese private enterprises to invest in Australia.
34. What are the main contents of the ChAFTA in the area of investment?
Answer: On the basis of equality and mutual benefits, both parties establish a comprehensive framework of investment rules under the ChAFTA, encourage and promote bilateral investments, so as to reinforce the bilateral all-round cooperation in the area of investment, and create a freer, more convenient and transparent, fairer and safer investment environment for investors of both parties.
As of the date of validation of the ChAFTA, both parties agree to mutually provide the other side the most-favored-nation treatment for investments, and will provide the other side with the preferential treatment which will be provided for other economic and trade partners. However, the preferential treatment to be provided by China for investors from Hong Kong, Macao and Taiwan in future will be excluded, and Australia should not require such preferential treatment. Australia provides China with the high-level investment treatment basically equivalent to that provided for its trade partners such as the USA, South Korea and Japan, and presents that in the form of negative list; meanwhile, Australia dramatically reduces the examination threshold for Chinese parties to make investments in Australia, with the standard of exemption from investment examination increased from AU$248 million to AU$1,078 billion.
In order to protect legitimate rights and interests of investors of both parties, the Investment-specific State to State Dispute Settlement of investors and host countries is included into the ChAFTA. In case of any dispute between an investor and host country, it will provide full right relief channels and powerful system guarantee for the investor, therefore enhancing the confidence of investors and further removing their worries.
35. The ChAFTA stipulates that China and Australia will carry out the second-phase negotiations in respect of issues concerning investment. How about the specific situation?
Answer: The ChAFTA includes future work mechanism in investment chapter. Both parties will evaluate the implementation effects after validation of the ChAFTA. China commits to negotiate with Australia according to pre-establishment national treatment together with the mode of negative list, further expand both parties access to investment market, and enhance the investment liberalization and facilitation level of both parties.
36. What are the main contents of the Investment-specific State to State Dispute Settlement (ISDS) of investors and host countries included in the ChAFTA? What significance do they have in Chinese enterprises?
Answer: The ISDS of investors and host countries stipulates issues such as dispute settlement procedures and substantial rules in detail and definitely, and is an effective mechanism for the settlement of disputes relating to investment. In terms of Chinese enterprises making investments in Australia, in case of any dispute with Australian party, the said mechanism will play a role of “mind relief”, and provide full right relief channels and powerful system guarantee for investors, further reinforcing the confidence of investors.
37. What are the main contents of the ChAFTA in the part of rules?
Answer: The part of rules of the ChAFTA includes such specific contents as initial provisions and definitions, trade in goods, rules of origin and implementation procedures, customs procedures and trade facilitation, sanitary and phytosanitary measures, technical barriers to trade, trade remedies, trade in services, investment, movement of natural persons, intellectual property, electronic commerce, transparency, institutional provisions, dispute settlement, general provisions and exceptions and final provisions.
38. What highlights does the ChAFTA have in terms of rules of origin?
Answer: Rules of origin primarily include the judgment criteria of origin of goods, direct transportation rules as well as certificate and declaration of origin. As for the judgment criteria of origin, the judgment criteria of “completely acquired” goods adopt internationally general principles, which emphasize that goods must be acquired or produced in full in a contracting party. The judgment criteria of “incompletely acquired” goods take the objective reality of international production of goods into account, and adopt specific standards on the change of tariff classification, regional value contents, manufacturing procedures and so on. As for direct transportation rules, in order to meet modern logistics development, the ChAFTA allows the logistics splitting of goods at a third party due to transportation needs. With regard to the certificate and declaration of origin, for the goods with the original pre-determined by the customs of importers, the importers may submit the declaration of origin to replace the certificate of origin and apply for preferential tariff treatment. As for the same batch of goods native to Australia with the duty-paid price not exceeding RMB 6,000, enterprises may be exempted from submitting the certificate of origin or the declaration of origin at the time of import.
39. What convenient arrangements has the ChAFTA made for enterprises of China and Australia in respect of performing customs procedures?
Answer: Compared with other free trade agreements concluded by China, the chapter about customs procedures and trade facilitation under the ChAFTA adopts relevant provisions in the Trade Facilitation Agreement of WTO for the first time, which enrich contents of customs procedures and trade facilitation about further simplifying customs clearance formalities, intensifying customs cooperation and applying means such as risk management and information technology to speed up the release of goods and provide efficient and convenient customs clearance services for enterprises of both parties. Specifically, in accordance with the ChAFTA, both parties shall publish on the Internet laws and regulations about bilateral trade; implement the preliminary ruling system about tariff classification, rules of origin and other issues; simplify customs procedures, allow advance declaration and guaranteed release, and temporarily allow the accelerated release of imported goods in accordance with domestic laws. All of these will provide great conveniences for trade companies of the two countries.
40. What provisions has the ChAFTA specified in respect of animal and plant inspection and quarantine and technical barriers to trade?
Answer: The chapter about sanitation and plant sanitation (SPS) measures mainly includes 11 articles on objectives, scope, transparency, regionalization and equivalence, committee and so on, proposes requirements about transparency further while restating relevant principles of WTO, highlights contents of bilateral cooperation, and integrates the clause on technical assistance and capacity building, so as to promote the common improvement of technical capacities of both parties. The chapter establishes the SPS committee and a negotiation mechanism so as to promote the timely solution of bilateral inspection and quarantine problems.
The chapter about technical barriers to trade (TBT) includes 13 articles on objectives, scope, transparency, international standards, committee and so on, and stipulates corresponding disciplines in respect of technical regulations, standards, conformity assessment procedures and so on, in order to encourage both parties to strengthen the cooperation in this field, explore and conduct technical assistance activities and enhance the transparency of technical trade measures. The chapter specially stipulates trade facilitation clause, so as to encourage both parties to adopt more international standards for relevant technical regulations and standards through cooperation, promote the mutual recognition of conformity assessment results and facilitate bilateral trade. The TBT committee established in the chapter will be responsible for supervision and implementation.
41. After the ChAFTA comes into force, if large quantities of Australian imports have an impact on China's domestic industries, are there countermeasures and protective measures?
Answer: The ChAFTA includes trade relief chapter which can protect Chinese industries and respond to shocks. The trade relief chapter includes 31 clauses of 10 articles, covering bilateral guarantee measures, global guarantee measures, anti-dumping measures as well as subsidy and anti-subsidy measures. According to the bilateral guarantee measure article, if the implement of the ChAFTA noticeably increases imports of a party, seriously shocking relevant domestic industry of the other party, the other party may take bilateral guarantee measures against it in the transitional period. That is to say, the other party may raise duties of relevant product or suspend further duty reduction, in a bid to properly restrict imports and protect rights and interests of domestic industry. The ChAFTA reserves relevant rights and obligations of both parties under trade relief rules of WTO.
42. What are the main contents of the ChAFTA in the area of intellectual property?
Answer: In the ChAFTA, the chapter on intellectual property includes 24 articles about patents, trademarks, copyrights, geographical indications, new specifies of plants, business secrets and law enforcement. In general, the chapter shows inclusiveness character, and takes full consideration of the differences and development status quo of rules of intellectual property of both countries, leaving room for the development of respective systems. Specifically, the chapter involves some new contents on collective management of copyright, liability of Internet service providers and so on, reflecting the importance of these issues at present and showing some characteristics of the times. Among the free trade agreements concluded by China, the ChAFTA covers richer and more detailed contents on intellectual property and has a higher protection level.
43. Does the ChAFTA involve in competition issues? What are the main contents?
Answer: The maintenance of the market order of fair competition is of great significance for realizing the objective of improvement of economic efficiency under the free trade agreements. In that light, the ChAFTA stipulates competition clause for the purpose of further reinforcing the cooperation between competition law enforcement organizations of China and Australia. On the premise of compliance with confidentiality provisions, the competition law enforcement organizations of both parties may exchange relevant information, make relevant technical cooperation, and conduct coordination and exchanges about cross-border law enforcement matters. The competition law enforcement organizations of both parties may establish relevant mechanism to ensure smooth cooperation.
44. Does the ChAFTA involve in electronic commerce? What are the main specific provisions? What effects will have on enterprises?
Answer: Under the ChAFTA, there is a separate chapter on the electronic commerce issue, including 11 articles on exemption from duties for electronic commerce, provision of protection for online consumers and data, mutual recognition of digital certificates and electronic signature, encouraging the use of digital certif[FS:Page]icates, enhancing the acceptance of electronic texts and encouraging both parties to make R&D cooperation in the area of electronic commerce. These will greatly facilitate enterprises in reducing operating costs, enhancing work efficiency and promoting the further development of bilateral trade.
45. Under the ChAFTA, do China and Australia have a special mechanism for how to deal with trade disputes? What effects will have on enterprises?
Answer: In addition to the aforesaid ISDS of investors and host countries, the ChAFTA stipulates the procedures and settlement of specific disputes relating to interpretation and application in detail. Both parties commit, in case of any dispute, to make utmost efforts to find a mutually satisfactory solution through cooperation and negotiation. The ChAFTA definitely stipulates the scope of application of disputes, places of settlement of disputes, negotiation mechanism, composition and functions of arbitral tribunal, the enforcement of arbitration reports and so on. As compared with the chapter on settlement of disputes in the free trade agreements concluded by China before, the chapter on settlement of disputes in the ChAFTA has a more complete structure, stricter disciplines and more amicable measures.
Translated by Fang Shanying and Wang Baihua