1. Opportunities and Challenges of the ChAFTA Agreement
Presented by Jack Bygott of Griffith University, Gold Coast
As Australia’s bilateral trading partnership with China begins to slow, the respective governments
have together negotiated and agreed on a Free Trade Agreement in hopes to benefit both
economies in the way of diversifying trade and increasing investment. As China continues to be the
fastest growing and now largest economy in the world, this recently signed China-Australia Free
Trade Agreement (ChAFTA) provides Australia with the opportunity to rise with China and restore
faith in its own economy. However, the agreement is not without its downfalls and this may see
some sectors of the Australian domestic market face great hardship in the near future.
In the last few decades, the Australian economy has enjoyed steady economic growth on the back of
the Chinese domestic market’s investment into infrastructure requiring a great deal of Iron Ore
(which the Australian landscape is so naturally rich in). However with more than 30% of all profits
from trade coming from Iron Ore and coal, the Australian government has often been criticised for
its lack of diversity in exports. Recently, this suggestion has become increasingly relevant as China’s
infrastructure development begins to slow down and so with it the mining boom that has been
driving Australia forward. This has led to Australia’s need to diversify our trading market to ensure
the growth of our economy. This explains why the Government decided to so hastily reach a Free
Trade Agreement allowing the Chinese investors to more readily put money behind alternate sectors,
like agriculture.
As an example of one of the major opportunities the ChAFTA presents, the cutting of all tariffs on
meat, dairy and wine will allow Australia to instate itself as a major agricultural source for China as
their growing population and shrinking farm-land beckon’s a greater need for international
agricultural investment. It also prompts growth in the Australian sector to keep up with both
domestic and international demand; creating many more jobs for Australians. This positive
development, however, also presents great political challenge from the Australian public as the fear
of growing food prices sparks outrage in the community.
To further fuel animosity against the trade agreement, China’s reduced tariffs on manufacturing will
greatly reduce demand for general manufacturing in Australia, resulting in the many lost jobs we’ve
seen repeatedly broadcast on media networks. While the ChAFTA may actually enhance job growth
in specialty manufactured goods (advanced engineering), the net job losses in this sector are
ultimately greater as a result of the agreement. This report focuses on the great challenge that
Australia now faces as a result of ChAFTA; the restructuring of the work force and promoting
recruitment into these new fields.