Australians will benefit from Japanese Free Trade Agreement deal: Tony Abbott

IT HAS been labelled a “groundbreaking pact”, but what does it all mean? For one, you’ll be paying a whole lot less for lots of products. Here’s how you’ll benefit.

FREE trade agreement? Historic deal? Seven years in the making?

If Australia’s groundbreaking pact with Japan was news to you yesterday, you’re probably wondering what it all means and why you should care.

Well, there’s a number of reasons; most notably because you’ll be paying a whole lot less for consumer products, including electrical and automotive goods.

News_Image_File: Allies: Tony Abbott shakes hands with Japanese Prime Minister Shinzo Abe after reaching a "substantive agreement" on the long-awaited free-trade deal. Picture: Kimimasa Mayama

So let’s start from the beginning: what is a free-trade agreement (FTA)?

FTAs aim to minimise obstacles between import and export trade in two or more countries.

These obstacles generally come in the form of tariffs, which is a set tax on imported product entering a country which makes it more expensive.

A lower tariff means less taxes and a cheaper product for shoppers.

By lowering the tariff, it allows industries to tap into unchartered markets like never before.

Essentially, overseas product is cheaper for Australian shoppers and Australian products are cheaper overseas.

“It's good for consumers, it's good for jobs and good for prosperity,” Prime Minister Tony Abbott told ABC radio this morning.

Trade Minister Andrew Robb said Australians will start seeing the benefits of the Japan deal by the end of the year, subject to parliamentary approval.

MORE: AUSTRALIA SIGNS FREE TRADE AGREEMENT WITH JAPAN

MORE: WILL NEW CARS BE CHEAPER UNDER THE FTA?

MORE: ABBOTT BREAKS NEW GROUND IN JAPAN

Here’s what you can expect.

ELECTRICAL GOODS

Expect a five per cent cut on the $1.3 billion worth of electrical goods imported from Japan this year, including fridges, microwaves, stereo systems, air conditioners and dishwashers.

AUTOMOTIVE INDUSTRY

An existing five per cent tariff on imported cars will be axed, dropping the price of a Japanese vehicle by $1500 on average.

Struggling Australian car part manufacturers, which have been hit by the departure of several major car makers, will be now be able to compete in the global supply chain.

BEEF AND DAIRY

Australia’s beef and dairy farmers are being touted as the big winners, with a reduction in tariffs set to unlock hundreds of millions of dollars for the sector.

In a $2.8 billion deal, Japan has agreed to reduce tariffs on Australian beef and dairy over 20 years, and the beef industry is reportedly “delighted” with the improved level of access.

News_Image_File: Feeling right at home ... A Japanese chef grills Australian beef and lamb chops for a reception hosted by visiting Australian Prime Minister Tony Abbott at the Australian embassy in Tokyo. Picture: Yoshikazu TSUNO

Before the FTA, Japan’s tariff on imported beef, for example, was a hefty 38 per cent, making it that much more expensive for Japanese consumers to buy Australian beef. With the FTA in place, Japan will lower its tariffs on beef to 23.5 per cent.

Tariffs on frozen beef will be halved, from 38.5 per cent to 19.5 per cent, with major cuts in the first year.

Cheese, wine and sea food farmers are also set to benefit, with “unprecedented access” to the Japanese market.

Mr Abbott said this would give farmers a head start in the Japanese market.

“There will be some modest differentials ... but those (tariffs) dramatically come down,” he said.

CANNED GOODS

Tariffs on canned products such as tomatoes, peaches and pears, as well as fruit and vegetable juices, will be eliminated.

News_Image_File: A tariff on canned goods will be eliminated under the Free Trade Agreement.

ADDED EXTRAS

Tariffs will also be lifted on Australian wool, cotton and beer exported to Japan.

MINERALS

Mineral exporters are happy to see a tariff cut of 3.2 per cent on steelmaking coal as well as a number of other minerals.

News_Rich_Media: Prime Minister Tony Abbott says a free-trade agreement with Japan is within Australia's grasp.