Negotiation of Agreement Establishing the ASEAN–Australia–New Zealand Free Trade Area (AANZFTA) was the first plurilateral free trade agreement (FTA) negotiation embarked upon by Australia. It was also the first time Australia and New Zealand were involved jointly in negotiating an FTA with third countries and the first time ASEAN embarked on comprehensive FTA negotiations covering all sectors simultaneously.
The AANZFTA negotiations originated in the suggestion made by the former Thai Deputy Prime Minister, Mr Supachai, at the National Trade and Investment Outlook Conference in Melbourne in November 1993, to explore the prospects for a link between the ASEAN Free Trade Area (AFTA) and the Australia–New Zealand Closer Economic Relations Trade Agreement (ANZCERTA, hereafter referred to as CER).
A High Level Task Force report in 2000, entitled ‘The Angkor Agenda’, argued in favour of the formation of a free trade area between AFTA and CER. The report concluded that establishing an AFTA-CER free trade area was not only feasible but also advisable if both ASEAN and CER were to keep pace with global developments. Economic modelling by the Centre for International Economics at that time indicated gains of US$48.1 billion of GDP (US$19.1 billion for Australia). The report was produced against the background of: the 1997-98 East Asian Financial Crisis; the increasing competitive challenge from rapidly emerging economies such as China and India; and the global spread of free trade agreements (FTAs) that accelerated following the failure of the 1999 Seattle World Trade Organization (WTO) Ministerial meeting to launch a new WTO Round.
For various reasons, the AFTA-CER FTA proposal was not accepted. Instead, in September 2002, Ministers signed an AFTA-CER Closer Economic Partnership (CEP) agreement. The CEP aimed to deepen the level of economic integration between Australia-New Zealand and the countries of ASEAN through a work program focused on trade facilitation and capacity building.
ASEAN’s interest in taking the CEP to a higher level was announced in April 2004. The formal decision to launch AANZFTA negotiations was taken by leaders at the ASEAN–Australia–New Zealand Commemorative Summit in November 2004. Leaders agreed to a comprehensive set of ‘Guiding Principles’ for the negotiations. The Guiding Principles committed countries to negotiate an agreement that covers goods, services and investment; the progressive elimination of all forms of barriers to trade and investment; and full implementation within ten years. The negotiations subsequently concluded at the ASEAN Economic Ministers-CER Trade Ministers meeting in August 2008, although it was also agreed that Australia would continue negotiating bilaterally with Indonesia and Malaysia with a view to improving automotive tariff commitments from those countries and to finalising those negotiations in time for AANZFTA to be ready for signature in December 2008. Although the negotiations were conducted between Australia, New Zealand and ASEAN as an entity, the completed FTA resulted in separate market access commitments for Australia, New Zealand and each of the ten ASEAN member countries.
Australia’s negotiating approach to AANZFTA was aimed at reaching an outcome that would be WTO-consistent, support the multilateral trading system, preserve the benefits contained in Australia’s existing bilateral FTAs and offer new opportunities for Australian exporters and investors.
AANZFTA was signed by Ministers from all 12 participating countries on 27 February 2009 in Hua Hin, Thailand. See the Joint Media Statement on the signing of the Agreement.
The AANZFTA was tabled in the Australian Parliament on 16 March 2009, along with the National Interest Analysis and Regulation Impact Statement. Legislation relating to AANZFTA’s tariff commitments and rules of origin was passed by the Australian Parliament on 17 September and given Royal Assent on 2 October 2009. Implementing regulations were approved by the Executive Council on 8 October, paving the way for Australia’s notification to AANZFTA Parties of its ratification of the Agreement on 21 October 2009.
The Agreement entered into force on 1 January 2010 for eight signatories: Australia, New Zealand, Brunei Darussalam, Malaysia, Myanmar, the Philippines, Singapore and Vietnam.
The Agreement entered into force for Thailand on 12 March 2010, for Laos on 1 January 2011, for Cambodia on 4 January 2011 and for Indonesia on 10 January 2012.
AANZFTA contains regional rules of origin and substantial tariff reduction and elimination commitments, as well as World Trade Organization (WTO)-plus commitments in other areas such as services, which provide commercially meaningful benefits to Australian business and further strengthen Australia's commercial ties with ASEAN.
Improved access and certainty in ASEAN markets resulting from AANZFTA are commercially significant for Australian industry, particularly in the Indonesian, Philippines and Vietnamese markets, where we do not have bilateral FTAs. In Vietnam’s case, AANZFTA provides an opportunity to build on the 2006 bilateral settlement agreed with Vietnam as part of its WTO accession. Australia’s trade with Brunei and ASEAN’s three Least Developed Countries (Cambodia, Laos and Myanmar) is modest, although Australian industry has growing interests in these markets, especially investment in the mining and resource sectors.
AANZFTA has the potential to generate broader benefits than a series of bilateral FTAs, by creating opportunities for Australian products to tap into regional supply chains.
The First Protocol to Amend AANZFTA was signed by Ministers on 26 August 2014. This responded to practical business concerns in resolving implementation problems associated with Certificates of Origin and Rules of Origin.
The First Protocol was tabled in both houses of the Australian Parliament, along with the National Interest Analysis and Regulation Impact Statement on 24 November 2014. Following a hearing on 2 March 2015, the Joint Standing Committee on Treaties recommended that binding treaty action be taken. A legislative amendment to enact the provisions of the First Protocol was made by the Governor General on 30 April 2015.
The First Protocol entered into force on 1 October 2015 for 10 Parties: Australia, New Zealand, Brunei Darussalam, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
The First Protocol entered into force for Cambodia in January 2016. It will enter into force for Indonesia as soon as Indonesia notifies the other Parties that it has completed its domestic requirements.
For further background on AANZFTA, please see the Resources tab.