Foreign investment and trade
Government releases exposure draft foreign investment legislation
While the Government’s exposure draft Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 substantially overhauls Australia’s existing foreign investment framework in ways that will impact administration of and compliance with the regime going forward (and fixes a number of technical defects with the existing legislation), there is little practical impact in terms of which transactions are notifiable (whether in a voluntary or mandatory sense) aside from the incorporation of changes that have been announced over the past several months.
China-Australia Free Trade Agreement signed
With China being Australia’s largest trading partner (with total trade worth almost $160 billion in 2013-14), the China-Australia Free Trade Agreement is a landmark agreement and, according to the Government, will lock in existing trade and provide the catalyst for future growth across a range of areas including goods, services and investment.
On 17 June 2015, Australia signed the China-Australia Free Trade Agreement (ChAFTA) which will enter into force after the completion of treaty-making processes in China and Australia (see implementation timeline).
Some key benefits of the ChAFTA include:
- on day one of ChAFTA, more than 85% of Australian goods exports will be tariff free, rising to 93% after 4 years and 95% on full implementation;
- the higher monetary thresholds for investments by private US, NZ, Korean, Chilean and Japanese investors in non-sensitive sectors will be extended to Chinese investors, although, similar to the position with Japan and Korea, the Government has retained the ability to screen Chinese investments at lower thresholds for agricultural land and agribusiness;
- China has offered its best-ever services commitments (with only Hong Kong and Macau enjoying a superior level);
- increased trade and investment between Australia and China by reducing barriers to labour mobility and improving temporary entry access within the context of each country’s existing immigration and employment frameworks and safeguards; and
- both China and Australia are subject to a ‘most favoured nation’ clause under which Australia’s competitive position into the future will be protected if China extends any more beneficial treatment to other trade partners in certain sectors.