On 17 November 2014, Chinese President Xi Jinping and Australian Prime Minister Tony Abbott announced that Australia and China had concluded a free trade agreement that has been under negotiation since April 2005. The ChAFTA is the latest of a series of FTAs concluded by the Australian Coalition Government since coming into power in September 2013,1 reflecting the Government’s policy of promoting ‘freer trade, economic infrastructure and private-sector-led growth’.2

Key benefits of the ChAFTA for Australian businesses include:3

  • the removal of tariffs on all resources and energy products, including the immediate removal of the current 3% tariff on Australian coking coal, and the removal of the current 6% tariff on non-coking coal within two years, and
  • Australian law firms will be able to establish commercial operations in cooperation with Chinese law firms in the Shanghai free-trade zone that will be allowed to service the whole of China.

Key benefits of the ChAFTA for Chinese businesses and investors include:

  • increasing the screening threshold for investments in Australia by Chinese private sector entities from A$248 million to A$1.078 billion (though all investment proposals by Chinese State Owned Entities (SOE) remain subject to scrutiny by the Australian Foreign Investment Review Board (FIRB) regardless of transaction size), 
  • the reduction of barriers to labour mobility which will grant skilled Chinese workers temporary entry into Australia for the purpose of providing labour on large infrastructure projects above A$150 million, and 
  • the addition of 5,000 working holiday visas provided for Chinese for entry to Australia on an annual basis.

Further features of the ChAFTA include:

  • a built-in review mechanism of the FTA after 3 years that will allow for further liberalisation, including expansion of market access over time, 
  • an Investor State Dispute Resolution (ISDS) mechanism that will enable foreign investors to invest with greater confidence and will also include safeguards to protect each Government’s ability to regulate in the public interest, 
  • Australia and China have also agreed to review their bilateral taxation arrangements, including relief from double taxation, and 
  • in addition to the conclusion of the ChAFTA, China and Australia signed a Memorandum of Understanding (MOU) on 17 November 2014 designating an official RMB clearing bank in Sydney.  This will allow overseas trading of up to RMB 50 billion in Australia for the first time improving the efficiency of cross-border transactions.

The full article was written by Donald Robertson, Partner, Leon Chung, Partner, Edwina Kwan, Senior Associate, Kate Lindeman, Solicitor, Sydney and Qingqing Bu, Trainee Solicitor, Beijing.


  1. See our articles on the Korea-Australia FTA, Text of Korea-Australia FTA released – ISDS provisions revealed and the Japan-Australia Economic Partnership Agreement.
  2. Tony Abbott, Address to the Business Council of Australia 30th Anniversary Dinner, Sydney, 4 December 2013.
  3. For further details, see Key Outcomes.