AUSTRALIA is on the verge of inking a historic free trade agreement with Japan that could see prices fall on…
AUSTRALIA is on the verge of inking a historic free trade agreement with Japan that could see prices fall on everything from electronics to sake.
Japanese Prime Minister Shinzo Abe arrives in Australia tonight in what is the first visit by a Japanese leader in 12 years. Tomorrow he will sign a free trade agreement with Prime Minister Abbott that has been seven years in the making and is designed to provide Australia with “valuable preferential access” to Japan’s $4.9 trillion economy.
The country of 127 million is already our second biggest trading partner, responsible for $70 billion, or 11 per cent, worth of total trade. So what are we really going to get out of an agreement billed as the most “liberalising bilateral agreement” ever? Here’s what it means for you:
Eyeing up a new car or laptop? It could be best to hold off as the main benefit for Australian consumers will be cheaper appliances and electronics produced in Japan.
International Business professor and former Austrade chief economist Tim Harcourt said consumers wanting cheap cars, plus those in the tourism, education and health care sectors will be the major beneficiaries over the long-term as the agreement strips away prohibitive barriers that can make trade difficult and expensive.
“For the consumer the idea is you get cheaper Japanese products into Australia whether it’s cars, or computers or sushi or sake.”
“That’s the benefit for us. For Japan, they buy so much stuff from us they’re going to want to run their economy which is very much reliant on Australia. The value of a free-trade agreement is estimated [to add] up to $39 billion worth of GDP in Australia and $27 billion for Japan,” he said.
The deal is also expected to be a goldmine for service industries including financial, legal and telecommunications businesses that could benefit from greater access to the Japanese market.
“The Japanese market will expand for a lot of Australians,” Mr Harcourt said. “[There will] probably be cheaper holidays and more Australian business presence in Japan.”
A delegation of the head of Japanese industrial giants Mitsubishi, Mitsui, Nippon Steel and NEC — whose companies’ market capitalisation is nearly equal to the gross domestic product of Denmark will also arrive in Australia for the signing of the agreement and Mr Abbott has said it will lead to greater job opportunities in Australia.
More than 97 per cent of Australian exporters are set to get preferential treatment or be duty-free under the deal. Beef producers are one of the biggest beneficiaries, set to have Japan’s standard 38.5 per cent tariff on frozen beef cut to 19.5 per cent once the agreement is fully implemented, according to the Department of Foreign Affairs and Trade (DFAT).
Fresh beef exporters will have tariffs cut to 23.5 per cent over the next 15 years while the beef offal export market, worth $167 million, will face reduced tariffs and an increased quota.
DAIRY AND OTHER FOOD PRODUCERS
The deal will be a boon for the $372 million dairy market, with duty free access for cheeses like cheddar and other opportunities for ice-cream and yoghurt producers.
The $226 million sugar market will also secure reduced levies, while tariffs on canned products like tomatoes, peaches and pears will be eliminated.
Producers who export bulk wine, barley, canola and vegetable oils, sea food including oysters and fish oils will have tariffs eliminated, while 95 per cent of Australian chocolate exporters will get to enter Japan duty-free or at a reduced rate.
Honey and pork producers will also receive preferential treatment.
While many major Australian exports like coal, iron ore and liquefied natural gas, enter Japan duty-free already, this will be extended to include other resources products over the next ten years including nickel, coke, petroleum oils, aluminium hydroxide and titanium dioxide, according to DFAT.
The visit will also be used to improve defence ties between the two countries with Mr Abbott and Mr Abe to sign an agreement on equipment and technology.
There has also been speculation in the Japanese media that a “visiting forces agreement” will open the door to disaster relief co-operation and joint military exercises.