Australia to sign free trade agreement with China

AUSSIES will see the cost of cheap electronics and whitegoods fall even lower, driving households into a spending frenzy thanks to a new agreement.

Cheap electronics to get even cheaper.

AUSSIES will see the cost of cheap electronics and whitegoods fall even lower, driving households into a spending frenzy thanks to a new agreement.

Australia has inked a historic trade deal with China, marking a new future for the two nations.

Tony Abbott today announced the agreement and said the deal was his mentor John Howard’s dream realised.

“It will change our countries for the better, it will change our region for the better, it will change our world for the better,” the Prime Minister said.

“Today we realise the vision of former PM John Howard who launched these negotiations a decade ago.”

The historic trade deal will mean Australian beef and wine can be more readily exported into China.

“The unprecedented agreement that we have signed today will not only enhance trade between our nations but also two-way investment,” Mr Abbott said.

He said more than just investment, the deal was about the growing trust between the two nations.

“Our investment of almost $58 billion in China with its very different legal and political system, is much more than just a bet on the world’s coming economic superpower, it’s proof of our trust in China,” Mr Abbott said.

Deal reached ... Tony Abbott meets with China's Minister of Commerce Gao Hucheng.

Trade Minister Andrew Robb told The Australian that cheaper imports would help stimulate businesses such as high-end manufacturers because they could get parts more cheaply.

“The world has changed and we need to get away from this mindset that exports are good and imports are bad. Cheaper products are also good for households and consumers, they increase buying power which translates into higher living standards,” Mr Robb said.

Australians would spend nearly $4500 more per household over the next 20 years because of the trade stimulus, from three free trade agreements from China, Korea and Japan. This will equate to about $46 billion, according to a government-commissioned report from the Centre for International Economic.

But this spending would also widen Australia’s trade deficit, which hit a record $3.9 billion in April.

The agreement will make it cheaper for Chinese consumers to buy goods such as Aussie beef, dairy, wine, boutique whisky, sea cucumbers, opal products and even deer velvet, by reducing tariffs on those products by up to 95 per cent.

Australian jobs are expected to grow by 9000 per year and would be 178,000 higher in 2035, the CIE found.

In exchange Australia will remove the five per cent tariff on Chinese electronics and whitegoods, which will make these products cheaper for Aussies.

While Australians are expected to spend an extra $46 billion on Asian goods, the boost to Australian products is expected to be $20 billion, or 11.1 per cent by 2035.

Some of this growth will be diverted from other markets, so Australia’s total exports will increase by 0.5 per cent compared to what would be the case without the agreements.

China is Australia’s top trading partner, with the two-way flow of goods and services exceeding $160 billion last year.