The China-Australia Free Trade Agreement (ChAFTA), which entered into force on 20 December 2015, provides improved access and protection for Australian investors and investments in China, and promotes increased Chinese investment in Australia.
ChAFTA improves opportunities for Australian investors in China
- China’s commitments on services in ChAFTA represent a significant improvement in the investment environment for a range of Australian services firms, including: health and aged care, shipping, architecture and urban planning, legal and mining services, as well as financial services.
- Under a most favoured nation (MFN) provision, included in ChAFTA, China also committed to extend to Australian investors and their investments any more favourable treatment it provides to other foreign investors under future investment arrangements.
ChAFTA promotes increased Chinese investment in Australia
- ChAFTA liberalises the screening threshold at which private Chinese investments in non-sensitive sectors are considered by Australia’s Foreign Investment Review Board (FIRB), raising this from $252 million to $1,094 million.
- Australia continuing to screen investments at lower thresholds for agricultural land and agribusiness and for sensitive sectors, including media, telecommunications and defence-related industries.
- The FIRB is also continuing to screen all direct investments, new business proposals and acquisitions of interests in land (including agricultural land), by Chinese state-owned enterprises, regardless of transaction size. ChAFTA did not change these arrangements in any way, consistent with the Government’s practice in other FTAs.
ChAFTA ISDS is a modern, balanced mechanism with explicit safeguards for legitimate public welfare regulation
- Australian investors in China can use the ISDS mechanism to protect their investments from discriminatory treatment compared with Chinese domestic investors.
- The ChAFTA Investment Chapter and ISDS provisions contain explicit safeguards to protect legitimate government regulation in areas such as public health and the environment.
- An ISDS claim under ChAFTA can only be made on the basis of a breach of either Party’s obligation to provide non-discriminatory (“national”) treatment to established investments of the other Party.
- An ISDS claim cannot be based on a breach of commitments in another chapter of ChAFTA.
- Government decisions on investment proposals, such as those considered by Australia’s Foreign Investment Review Board, cannot be challenged using the ISDS mechanism.
More detail on the investment outcomes can be found in the detailed fact sheet on investment and ISDS, or in the full text of the China-Australia Free Trade Agreement.