Impact on the Northern Territory for trade in goods and services

Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA)

17 November 2010

1. Trade in goods

Northern Territory merchandise exports to ASEAN (calendar year 2009): $323 million. Principal exports:

  • Live animals (excluding seafood) $203 million
  • Inorganic chemicals $12 million
  • Tubes and pipes of iron and steel $10 million
  • Refined petroleum $9 million
  • Trailers and semi-trailers $7 million
  • Ferrous waste and scrap $5 million
  • Civil engineering equipment and parts $3 million
  • Manufactures of base metals $3 million
  • Hand or machine tools $2 million
  • Confidential items of trade $41 million

The following analysis summarises tariff outcomes under the Agreement Establishing the ASEAN-Australia-New Zealand FTA (AANZFTA) for Indonesia, Malaysia, the Philippines and Vietnam for some of the Northern Territory' principal exports. These are the four largest AANZFTA markets with which Australia does not already have a bilateral FTA.

The tariff outcomes in AANZFTA include (export figures are for the Northern Territory, calendar year 2009):

Live animals

  • On exports of $189.7 million of live bovine animals to Indonesia (0102) 1:
    • The binding of 0% tariffs on pure-bred breeding animals and oxen from entry-into-force.
    • The elimination of the 5% tariff from entry-into-force on buffaloes.
    • The reduction of the 5% tariff to 3% in 2025 on other live bovine animals.
  • The binding of 0% tariffs from 2010 on $3.0 million of exports of live bovine animals to Malaysia (0102).
  • The elimination from 2010 of tariffs of 1% and 3% on $6.0 million of exports of live bovine animals to the Philippines (0102).

Inorganic chemical elements

  • The binding of a 0% tariff from entry-into-force on $7.5 million of exports of aluminium hydroxide to Indonesia (2818.30).
  • The binding of a 0% tariff from 2010 on $1.2 million of exports of aluminium hydroxide to Malaysia (2818.30).

Iron and steel

  • The binding of 0% tariffs from entry-into-force on exports of $4.3 million of ferrous waste and scrap to Indonesia (7204.49).
  • On $8.1 million of exports to Indonesia of casing and tubing of a kind used for drilling for oil or gas (7304.24 + 7304.29):
    • Elimination from entry-into-force of a 5% tariff on unfinished casing and tubing (green pipe) with yield strength of less than 75,000 Psi.
    • The reduction of a 15% tariff to 7% from entry-into-force, to 5% in 2011, 3% in 2012, and its elimination in 2015 on other casing and tubing.
  • Elimination from 1 January 2010 of a 3% tariff on $0.2 million of exports of casing and tubing of a kind used for drilling for oil or gas to the Philippines (7304.24, 7304.29).
  • The reduction of 10% tariffs to 5% from entry-into-force, to 3% in 2011, and elimination in 2012, on $1.7 million of exports of iron and steel articles, not elsewhere specified to Indonesia (7326.90).

Refined petroleum

  • On $6.8 million of exports to Indonesia (2710.11 + 2710.19):
    • The binding of 0% tariffs from entry-into-force on most refined petroleum products.
    • The binding of 30% tariffs from entry-into-force followed by annual reductions from 2015 until reduced to 15% by 2025 for lubricating oils and greases and hydraulic brake fluid.

Trailers and semi-trailers

  • The binding of 0% tariffs from entry-into-force on exports of $6.4 million of containers for multi-mode transport to Indonesia (8609).

Civil engineering equipment and parts

  • Binding of a 0% tariff on entry-into-force on exports of $2.0 million of parts for boring or sinking machinery to Indonesia (8431.43)

Corals

  • On exports of $0.3 million to Vietnam (0508):
    • The binding of a 5% tariff from 1 January 2010, its reduction to 4% in 2018 and elimination in 2019 on corals and similar materials as well as shells of molluscs, crustaceans and echinoderms.
    • The binding of a 5% tariff from 1 January 2010 and its elimination in 2016 on other corals and shells.

Copper

  • The binding of a 0% tariff from 2010 on $1.6 million of exports of unwrought refined copper cathodes to Malaysia (7403.11).

Worked bone, tortoise-shell and other animal carving material, and articles thereof

  • The reduction of a tariff of 40% to 35% from 1 January 2010 and its elimination in 2018, on $0.5 million of exports of worked bone, tortoise-shell and other animal carving material to Vietnam (9601.90).

2. Trade in services opportunities for the Northern Territory

Services exporters in the Northern Territory are in a strong position to access the growing services markets in ASEAN. Exports of services to the world, which were worth $873 million in 2009, account for 14 per cent of the Territory' total exports.

  • Recreational travel and government services were among the largest sectors, valued at $322 million and $320m, or 37% of services exports, respectively.
  • Statistics are not available on the percentage of Northern Territory' services exports that go to ASEAN. However, ASEAN accounts for 15% of Australia' services exports.

Under AANZFTA, ASEAN countries have made substantial, commercially meaningful improvements on existing WTO commitments in a range of services sectors – including construction, mining and energy-related services, education and professional services – where Northern Territory providers have strong capabilities. For example:

  • In construction services, Indonesia and Malaysia have committed to allowing joint ventures with aggregate foreign equity of 55 and 49 per cent respectively. Brunei Darussalam has committed to allow foreign equity in construction firms of 50 per cent.
  • In mining and energy related services, the Philippines has made commitments that allow up to 100 per cent foreign equity for construction of large scale mining development projects covered by a financial and technical assistance agreement under the Philippine Mining Act.
  • The Philippines also made commitments that allow up to 100 per cent foreign equity, subject to the President' approval, for oil and gas exploration and development and 40 per cent foreign equity for geothermal exploration and development; coal exploration and development; pipeline transport; and services related to energy distribution or power generation (up to 100 per cent foreign equity is allowed for construction of power plants under the andldquo;build-operate-transferandrdquo; scheme).
  • Vietnam has committed to reduce the experience requirement for Australian teachers in higher, secondary and other education services (including foreign language training) from five to three years and to expand from 5 to 36 the (WTO-committed) fields of study that can be delivered by foreign providers.
  • Malaysia has committed to allow joint ventures in higher education with foreign equity up to 51 per cent, subject to relevance of courses to Malaysia' education objectives. It has also committed to allow temporary entry and stay of lecturers and experts and professionals (subject to numerical caps) and contractual service suppliers in the education sector for periods of stay of up to 10 years.
  • The Philippines has bound arrangements under which Australian accountants, landscape architects and civil, mechanical metallurgical and sanitary engineers can practice under temporary permits from its Professional Regulation Commission.
  • Indonesia has committed to permit foreign lawyers to work or take part in Indonesian law firms (up to 5 foreign lawyers per firm with an upper limit of 20 per cent) as employees or experts in international law.
  • Vietnam has bound arrangements under which foreign law firms can employ Vietnamese lawyers and foreign lawyers can practice in Vietnamese law firms to advise on foreign/international law.

A built-in review provision will ensure that further improvements can be negotiated over time, as the ASEAN countries progressively liberalise their services sectors.

1 The four digit heading or the six digit sub-heading of the tariff system is provided that corresponds to the export figure given.

Last Updated: 10 December 2010