Australia signs FTA with Japan

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After seven years of negotiation, Prime Minister Tony Abbott, with the help of Trade Minister Andrew Robb, has signed a free trade agreement (FTA) between Australia and Japan.

The scale of the agreement goes well beyond initial expectations, with Australian agriculture being allowed unprecedented access to Japanese markets and tariffs eliminated on most horticultural products. Wine and cheese makers will also be given greater access to export their products to Japan, with tariffs cut on some items and quotas lifted on others.

Early industry estimates suggest the agreement could grow the Australian beef industry by $2.6 billion over the next 20 years and other industries could record similar gains. A 2005 government analysis suggested that a similar deal with Japan would add $39 billion to the economy over two decades.

Australia has agreed to drop the five per cent tariff on Japanese cars within a year for three quarters of vehicles, while the remainder will lose the tariff within three years. The current five per cent tariff on components will also be dropped in five years.

The agreement is the first of its kind to be struck by Japan with any country.

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Opinion: Australia is open for business

This week has seen two significant steps forward for the economic recovery of Australia, with free trade agreements with Japan and also South Korea being signed by Prime Minister Tony Abbott on his seven-day trade mission to North Asia.

The details of both these trade agreements signal a changing landscape for Australia, with the agreements removing many tariffs and restrictions surrounding electronics, cars, auto components and whitegoods. The removal of these tariffs will increase Australian sales of products from our trade partners while resulting in significantly lower prices for consumers. The removal of tariffs and increases in quota numbers will see an unprecedented increase in the export of beef, diary, sugar, wool, cotton, lamb, beer, seafood and more, and is estimated to grow each of these industries in Australia by close to $2.6 billion over the next 20 years.

While these agreements don’t spell the immediate death of certain affected industries, the writing has been on the wall for many years with struggling industries such as the Australian car industry which has seen the announcement from major brands of plans to exit the manufacturing industry in Australia. The agreement signed with Japan should cause an average drop in car prices of more than $1000 on some models sold in Australia, making it very difficult for Australian manufactures to be competitive.

It’s difficult to accept change, and even harder to see an industry such as the car manufacturing industry practically disappear overnight, but if we are to be progressive as a nation, we need to focus on the industries which best suit our plentiful land resources and high (by international standards) minimum pay rates. We are heading for 10 years of budget deficits, according to current figures, and I feel these trade agreements are a step in the right direction.

What do you think? Has Tony Abbott doomed a number of Australian industries with these agreements? Or do you think these agreements are in the best interests of a prosperous, debt-free Australia?

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Written by Drew

Starting out as a week of work experience in 2005 while studying his Bachelor of Business at Swinburne University, Drew has never left his post and has been with the company ever since, working on the websites digital needs. Drew has a passion for all things technology which is only rivalled for his love of all things sport (watching, not playing).


Total Comments: 30
  1. 0

    It is the return to “Serfdom”.Tony Abbott is a H.R .Nicholls Society man to the core,and the agenda is to put all Australian workers on a master servant basis with their employers.

  2. 0

    Hey! They buy our stuff so we buy theirs. What’s the problem? I don’t care, just so long as the products we get in return on the free trade agreement aren’t as bad as the crap we get from China!

    • 0

      The Government is currently in discussions with China re a free trade agreement.
      It really comes down to who wins and who loses it would be fair to say that the top end of town will win and the rest of us will lose.
      It was predicted some years ago that Australia will become the poor white trash of Asia and following current thinking by our white ivory tower economist that looks like we are on the way to that status.
      Pity our children and their children.

  3. 0

    As long as Australia is importing goods from Japan, China and South Korea AND Australia is permitted to sell its goods and services in those countries, I don’t see a problem. If you don’t want Japanese, Chinese or South Korean products don’t buy them – regardless of the price – buy Australian. The tariff or not won’t matter.

    However, if those (or any) countries are allowed to buy the Australian companies making the products exported to them, or the agricultural land on which the crops and meat and dairy are grown or the water they use, THEN I have an issue.

    • 0

      The point is that Australian made goods will disappear as they will not be able to compete either on the basis of low wages in those countries or because of the massive scale of production these countries have compared to us.
      This is an era of not only Free Trade but also Globalisation and hence a capitalists dream come true. Australian Companies will be bought and Australian Land will also be purchased whether we like it or not.
      Don’t forget that privatisation of State owned water boards is on the table, according to Joe Hockey, so be prepared for those to be foreign owned like Victoria’s electricity industry.

    • 0

      Tom Tank, it is the very economies of scale to which you refer which have made it impossible for a sustainable car industry to be maintained in Australia. Asian countries see Australia’s possibilities for their future food production and have been buying some of our agricultural land for their own needs. Hopefully with the opening up of Asian markets, our own producers will be the ones to benefit from increased overseas demand.

    • 0

      It there is conflict the overseas owned producers and businesses in Aust. will export the food and other goods to their homeland and we will be left with food shortages.
      A lot of companies have merged over the years then been bought by overseas companies. e.g. Dairy Farmers (part of it was originally known as Adelaide Milk Supply (Company or Cooperative) Ltd—Known as AMSCOL is now owned by an Asian Company.
      There was many individual biscuit companies, all Aust owned and we had factories in Adelaide besides interstate. Arnotts Biscuits as it is now known was originally 3 companies – Arnotts, Motteram and Menz. Each had sales reps. that called at shops during WW11. My Grandma had a shop that my Mum managed.
      A huge quantity of their biscuits are made overseas. There were also many confectionery companies – Rowntrees, Hoadleys, Lifesavers. They are no longer indiviual companies and have been taken over by others. Lifesavers were still a separate company until at least 1972. A friend of my cousin was a driver for them still when she had her 21st birthday and made deliveries every Monday morning at the company I worked for.

  4. 0

    The FTA with Japan is great new news for Australian primary producers and some of our agricultural secondary industries. Some Australian states viz. Tasmania, already have a relationship with Japan because of the government’s stance on non genetically modified crops. Japan has a non gm policy and the Japanese consumer is more aware of food ingredients and labelling than are Australian consumers. Japan like China, sees Australia as a relatively clean producer. Our sugar, rice, beef, wheat, canola will be the big winners. We should be cautious about cotton. Although the Japanese will not take our gm cotton seed oil they may take our cotton until the Japanese consumers take the moral high ground and reject it because of its gm origin. Japan rejected wheat from Canada and the US because gm contamination was detected. Australia should learn from this.
    A lot of the major Japanese car brands are manufactured and assembled in the poorer Asian countries. I would not hold my breath hoping for cheaper Japanese cars in Australia.

    • 0

      Considerring the fact that we have severe water shortages most of the time rice and cotton are 2 industries that maybe should grow the crops in their own countries and us import what we need. We already buy a lot of our rice and cotton clothing from overseas. Then we would have water for our fruit produce which has largely died out because our producers are not allowed enough water to keep the trees alive and producing. The vegetable production sector is suffering too. They have to rely on sub-standard water in some areas.

  5. 0

    What has Tones had to say about “investor state dispute settlement provisions”. Basically means Australia’s sovereignty is put at risk. For example if a foreign company’s ability to conduct business is affected due to local laws they can sue.

  6. 0

    What worries me is the loss of so many manufacturing businesses , our engineering ect, so many skills will be lost, and if ever there is a war we shall be sitting targets, I hope so much I am wrong,

  7. 0

    I started to boggle when I saw the word ‘seafood’…West Australians already pay through the nose for prawns and crayfish. We over fished crabs to the extent we had to buy-in for the Crab Fest a few years ago, more exports of Ocean produce will see it all off.

  8. 0

    Did we get the best deal? Going to negotiations when you have stated to the electorate that you will achieve a Free Trade Agreement puts you immediately behind the eight ball. It’s like going to a car yard with the salesman knowing that you will purchase the car because
    you must have the vehicle because you are desperate.Bad negotiating position!!

    whatever the condition because you are desperate for the deal.

  9. 0

    This is not ROCKET SCIENCE
    Japan is so polluted
    They are desperate.

    • 0

      HOWEVER :-
      I can’t see them paying TOP DOLLAR for our exports.
      Most likely we will get 10 cents in the dollar’s worth for our exports.

      ” the agreement goes well beyond initial expectations”

  10. 0

    ….so Japan get more beef,we get less land for our own food production,and a whole of of cars for the scrape heap when everyone decides to buy new ones,same goes with all the electronics which we will have in surplus and accumulate in landfill.

    • 0

      The electronics and whitegoods aren’t made to last either. In Sept 2012 I had to buy a new washing machine because my old one which was over 20 years old “died” and it would have cost more to get it repaired – if the parts were still available – than to buy a new one. I have already had to call out service personell 4 times. Gee am I glad I got an extended warranty. Over Easter I discovered that the inner bowl continually works its way over to one side and “knocks”. I have even run it with no clothes in it – just water and it still sometimes did it.

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