Impact on Western Australia for trade in goods and services

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

17 November 2010

1. Trade in goods

Western Australian merchandise exports to ASEAN (calendar year 2009): $7.2 billion. Principal exports:

  • Crude petroleum $2.5 billion
  • Gold $1.8 billion
  • Wheat1 $581 million
  • Live bovine animals $171 million
  • Pigments, paints and varnishes $144 million
  • Cereal preparations $143 million
  • Refined petroleum $ 67 million
  • Ferrous waste and scrap $ 59 million
  • Meat, excl beef f.c.f. $ 52 million
  • Confidential items of trade $986 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 Western Australia’s 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 Western Australia, calendar year 2009):

Crude petroleum, petroleum gases and other gaseous hydrocarbons

  • The binding of 0% tariffs from entry-into-force on $91 million of exports of petroleum oils and oils obtained from bituminous minerals, crude to Indonesia (2709) 2.
  • The binding of a 0% tariff and the elimination of a 5% tariff from 1 January 2010 on $214.8 million of exports of petroleum oils and oils obtained from bituminous minerals, crude to Malaysia (2709).
  • The binding of a 0% tariff from 1 January 2010 on $6.2 million of exports of liquefied propane to Malaysia (2711.12).
  • The binding of a 0% tariff from 1 January 2010 on $6.4 million of exports of liquefied butanes to Malaysia (2711.13).
  • The elimination of 3% tariffs from 1 January 2010 on $27.5 million of exports of petroleum oils and oils obtained from bituminous minerals, crude to the Philippines (2709).
  • The elimination of 3% tariffs from 1 January 2010 on $4.7 million of exports of liquefied propane to the Philippines (2711.12).
  • The elimination of 3% tariffs from 1 January 2010 on $2.8 million of exports of liquefied butanes to the Philippines (2711.13).

Gold

Of Western Australia’s second most important export to ASEAN, gold (7108), most is currently exported to Thailand ($1.2 billion in 2009) and Singapore ($616 million). AANZFTA has bound the current 0% tariff in both countries from 2010 (with the 0% tariff already being bound in Australia’s existing bilateral FTAs with these two countries). AANZFTA will also ensure tariff-free treatment for exports to other ASEAN markets:

  • The binding of 0% tariffs from entry-into-force and the elimination of 10% tariffs by 2012 to Indonesia.
  • The binding of a 0% tariff on 1 January 2010 to Malaysia.
  • The elimination of a 3% tariff on 1 January 2010 to the Philippines.
  • On exports of $19.1 million to Vietnam (7108):
    • the elimination of 1% tariffs on unwrought gold by 2019.
    • all other tariffs eliminated by 2016.

Cereals and cereal preparations

The outcomes on wheat include:

  • The binding of 0% tariffs from entry-into-force on $327.2 million of exports of wheat to Indonesia (1001.90).
  • The binding of 0% tariffs from 1 January 2010 on $122.7 million of exports of wheat to Malaysia (1001.90).
  • The elimination of 3% tariffs from 1 January 2010 on $2.1 million of exports of wheat to the Philippines (1001.90).
  • The elimination of a 5% tariff in 2016 on $92.1 million of exports of wheat to Vietnam (1001.90).

The outcomes on worked cereal grains include:

  • The binding of a 5% tariff from entry-into-force phasing to 0% in 2020 on $3.0 million of exports of rolled or flaked grains of oats to Indonesia (1104.12).
  • The binding of a 0% tariff from 1 January 2010 on $2.6 million of exports of rolled or flaked grains of oats to Malaysia (1104.12).
  • The elimination of a 3% tariff from 1 January 2010 on $6.6 million of exports of rolled or flaked grains of oats to the Philippines (1104.12).

The outcomes on malt include:

  • The binding of a 5% tariff from entry-into-force, phasing to 0% in 2023 on $5.9 million of exports of unroasted malt to Indonesia (1107.10).
  • The binding of a 0% tariff from 1 January 2010 on $1.8 million of exports of unroasted malt to Malaysia (1107.10).
  • The elimination from 1 January 2010 of a 1% tariff on $40 million of exports of unroasted malt to the Philippines (1107.10).
  • The elimination of a 5% tariff in 2016 on $30.8 million of exports of unroasted malt to Vietnam (1107.10).

Live animals, meat and animal products

  • On exports of $160.3 million of live bovine animals (other than pure-bred breeding animals) to Indonesia (0102):
    • The binding of 0% tariffs on pure-bred breeding animals and oxen.
    • The elimination of a 5% tariff from entry-into-force on buffaloes.
    • The reduction of a 5% tariff to 3% in 2025 on other live bovine animals.
  • The binding of 5% tariffs from entry-into-force with elimination in 2020 on $34.6 million of exports of fresh, chilled or frozen boneless beef cuts to Indonesia (0201.30, 0202.30).
  • The binding of 5% tariffs from entry-into-force with elimination in 2020 on $2.7 million of exports of other frozen edible beef offal to Indonesia (0206.29).
  • The binding of 0% tariffs from 1 January 2010 on $5.3 million of exports of live bovine animals to Malaysia (0102).
  • The binding of 0% tariffs from 1 January 2010 on $2.1 million of exports of frozen sheepmeat cuts with bone in (excluding carcasses and half-carcasses) to Malaysia (0204.42).
  • The reduction of 10% tariffs to 5% from 1 January 2010 with elimination in 2012 on $2.4 million of exports of fresh, chilled or frozen boneless beef cuts to the Philippines (0201.30, 0202.30).

Pigments, paints and varnishes

The major exports of pigments, paints and varnishes to ASEAN are pigments and preparations based on titanium oxide (3206.11). Many of these exports are to Thailand ($40 million in 2009), and AANZFTA has bound the tariff at 0% on these exports from 1 January 2010 (the same as the existing binding in the Thailand-Australia FTA (TAFTA)). AANZFTA will also deliver tariff-free treatment in Indonesia, Malaysia, the Philippines and Vietnam:

  • The binding of a 0% tariff and the elimination of a 5% tariff from entry-into-force on $20.8 million of exports of pigments and preparations based on titanium dioxide to Indonesia (3206.11).
  • The reduction of a 15% tariff to 7% from 1 January 2010 and its elimination in 2012, on $6.2 million of exports of pigments and preparations based on titanium dioxide to Malaysia (3206.11).
  • The elimination of a 3% and 5% tariff from 1 January 2010 on $31.2 million of exports of pigments and preparations based on titanium dioxide to the Philippines (3206.11).
  • The binding of 0% tariffs from 1 January 2010 on $22.0 million of exports of pigments and preparations based on titanium dioxide to Vietnam (3206.11).

Iron and steel

  • The binding of 0% tariffs from entry-into-force on $31.1 million of exports of ferrous waste and scrap to Indonesia (7204).
  • The elimination of a 5% tariff from entry-into-force and the binding of a 15% tariff with further reduction to 5% in 2016 on $1.1 million of exports of other drill pipes to Indonesia (7304.23).
  • Annual reductions from a 20% tariff from entry-into-force, leading to its elimination in 2014, on $2.3 million of exports of articles of iron or steel wire to Indonesia (7326.20).
  • The reduction of a 50% tariff to 10% on 1 January 2010 with elimination in 2013 on $1.6 million of exports of line pipe of iron or steel used for oil or gas pipelines to Malaysia (7304.19).
  • The binding of 0% tariffs from 1 January 2010 on $17.5 million of exports of ferrous waste and scrap to Vietnam (7204).

Aluminium

  • The elimination of 5% tariffs from entry-into-force on $2.0 million of exports of nails, tacks, staples (other than those of 8305), screws, bolts, nuts etc of aluminium to Indonesia (7616.10).
  • The binding of a 0% tariff from 1 January 2010 on $1.2 million of exports of aluminium waste and scrap to Malaysia (7602).
  • The reduction of a 30% tariff to 7% from 1 January 2010 and elimination in 2012 on $1.4 million of exports of unalloyed aluminium in plates, sheets and strip to Malaysia (7606.11).
  • The reduction of a 30% tariff to 10% from 1 January 2010, to 7% in 2011, 5% in 2012 and tariff elimination in 2013 on $1.4 million of exports of aluminium alloys in plates, sheets and strip to Malaysia (7606.12).

Nickel

  • Most of the exports of nickel from Western Australia to ASEAN in 2009 went to Singapore ($37 million (7505.11); these exports face a 0% tariff bound in both AANZFTA and the Singapore-Australia FTA (SAFTA)). The outcomes for nickel (Chapter 75 of the Tariff) under AANZFTA will ensure tariff-free treatment for exports to Indonesia, Malaysia, the Philippines and Vietnam:
    • For Indonesia, the binding of a 0% tariff and the elimination of 5% tariffs from entry-into-force
      • and tariffs of 10% reduced to 5% from entry-into-force and eliminated in 2012.
    • For Malaysia, the Philippines and Vietnam binding at 0% tariffs from 1 January 2010.

Dairy

  • Milk and cream, not concentrated nor containing added sugar or other sweetening matter on $3.1 million of exports to Malaysia (0401), tariff quotas are applied with:
    • In-quota tariffs of 15% on 1 January 2010 reducing to 0% by 2013 for the following volumes:
      • Milk with a fat content at or below 1%: 600,000 litres increasing to 669,401 litres by 2020 (0401.10);
      • Milk with a fat content between 1% and 6%: 3 million litres increasing to 3,347,005 litres by 2020 (0401.20); and
      • Milk with a fat content exceeding 6%: 20,000 litres increasing to 22,313 litres by 2020 (0401.30).
    • Out-of-quota tariffs bound at 40% on 1 January 2010 and reducing to 20% by 2013.
  • The elimination of 1% tariffs from 1 January 2010 on $1.0 million of exports of whey and modified whey to the Philippines (0404.10).

Vegetable products

  • The binding of a 0% tariff from 1 January 2010 on $7.0 million of exports of carrots and turnips, fresh or chilled to Malaysia (0706.10).
  • The binding of a 0% tariff from 1 January 2010 on $4.2 million of exports of dried shelled peas to Malaysia (0713.10).
  • The binding of a 0% tariff from 1 January 2010 on $1.1 million of exports of dried shelled broad beans to Malaysia (0713.50).
  • The elimination of 3% tariffs from 1 January 2010 on $0.9 million of exports of dried shelled peas to the Philippines (0713.10).

Machinery and parts of machinery

  • On exports of $1.2 million of other pumps for liquids to Indonesia: (8413.81):
    • The reduction of a 5% tariff from 2015 to 4% on exports of electrically operated pumps.
    • The elimination of a 5% tariff from entry-into-force on exports of non-electrically operated pumps.
  • The binding of 0% tariffs from entry-into-force on $1.5 million of parts of pumps for liquids to Indonesia (8413.91).
  • The binding of 0% tariffs from entry-into-force on $3.1 million of other self-propelled boring or sinking machinery to Indonesia (8430.41).
  • The binding of a 0% tariff from entry-into-force on $4.2 million of exports of parts for boring or sinking machinery to Indonesia (8431.43).
  • The binding of 0% tariffs from entry-into-force on $2.7 million of exports of parts of various lifting, handling, moving and grading machinery to Indonesia (8431.49)
  • The binding of 0% tariffs and the elimination of 5% tariffs from entry-into-force on $2.0 million of exports of crushing or grinding machinery for stones or other minerals to Indonesia (8474.20).
  • The binding of 0% tariffs from entry-into-force on $8.3 million of exports of parts for machinery for working stone or other minerals to Indonesia (8474.90).
  • The binding of 0% tariffs from 1 January 2010 on $1.5 million of exports of parts for other gas turbines to Malaysia (8411.99).
  • The reduction of a 10% tariff from 1 January 2010 to 5% and elimination from 2011 on $2.7 million of exports of parts for boring or sinking machinery to Malaysia (8431.43).
  • The binding of 0% and 5% tariffs at 0% from 1 January 2010 on $1.6 million of exports of other machines and mechanical appliances having individual functions to Malaysia (8479.89).
  • The elimination of a 1% tariff on 1 January 2010 on $0.8 million of exports of other boring and drilling machinery to the Philippines (8430.49).
  • The elimination from 1 January 2010 of a 3% tariff on $0.9 million of exports of parts for machinery for working stone or other minerals to the Philippines (8474.90).
  • On $1.1 million of exports of other valves to the Philippines (8481.80):
    • Most tariffs of 1%, 3% and 5% eliminated on 1 January 2010; and
    • Tariffs of 5% on fuel cut and other valves bound at 5% on 1 January 2010 and reduced to 4% in 2015

Products of the chemical or allied industries

  • The binding of 0% tariffs from entry-into-force on exports of $5.3 million of exports of aluminium hydroxide to Indonesia (2818.30).
  • The binding of 0% tariffs from entry-into-force on $20.1 million of exports of mineral or chemical fertilizers to Indonesia (3102.30).
  • The binding of 0% tariffs from 1 January 2010 on exports of $5.6 million of aluminium hydroxide to Malaysia (2818.30).
  • The binding of 0% tariffs from 1 January 2010 on exports of $1.3 million of other medicaments for retail sale to Malaysia (3004.90).
  • The elimination of a 1% tariff from 1 January 2010 on exports of $9.4 million of anhydrous ammonia to the Philippines.

Other

  • The binding of a 0% tariff on $6.5 million of exports of emery, natural corundum, garnet and other natural abrasives to Malaysia (2513.20).
  • The reduction of a 30% tariff to 25% from 1 January 2010, phasing to 0% in 2018 on $1.6 million of exports of frozen shrimps and prawns to Vietnam (0306.13).

2. Trade in services opportunities for Western Australia

Services exporters in Western Australia are in a strong position to access the growing services markets in ASEAN. Exports of services to the world, which were worth $5.3 billion in 2009, account for 6.4 per cent of the State’s total exports.

  • The largest sectors are recreational travel and education-related travel exports, accounting for $1.5 billion and $1.3 billion, or 30.0% and 23.7% of services exports, respectively.
  • Statistics are not available on the percentage of Western Australia’s services exports that go to ASEAN. However, ASEAN accounts for 15% of Australia’s services exports.

Under AANZFTA, ASEAN countries have made substantial, commercially meaningful improvements on existing WTO commitments in a range of services sectors – including mining and energy-related services, education, construction, and professional services – where Western Australian 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’s 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 “build-operate-transfer” 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’s 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.

  • 1Until April 2009 the value of bulk wheat exports by destination country was confidential in Australian Bureau of Statistics merchandise trade statistics. Therefore, the figures in this paper for wheat exports generally under-report actual trade in 2009.
  • 2The 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