The agreement will allow $65bn worth of Australias goods to be exported to China duty free

The agreement will allow $65bn worth of Australia's goods to be exported to China duty free

The China-Australia Free Trade Agreement (ChAFTA) has officially taken effect after more than a decade of talks. 

The trade deal, which was signed in Canberra in June, came into force over the weekend and will deliver competitive advantages for exporters and investors from both countries. For Australia, the FTA unlocks significant opportunities in China, Australia's largest export market for both goods and services, accounting for nearly a third of total exports, and a growing source of foreign investment.

Initially, the agreement will allow around US$65bn worth of Australia's goods to be exported to China duty free, amounting to over 86% of its total exports. Once the agreement is fully implemented in four years time, around 96% of Australian goods will enter China duty free, while 100% of Chinese exports to Australia will benefit from zero-tariffs.

China currently applies tariffs of up to 47% on some of Australia's manufactured products, including clothing. These will be eliminated under the new FTA. Conversely, Australia has committed to eliminating its remaining tariffs on imports from China, and will phase out its 5% tariff on clothing and footwear, amongst other industries, within two to four years, "to allow [the] industry to adjust".

In particular, the ChAFTA means China will gain better access to Australian wool, while Australia will receive Chinese textiles and apparel at lower prices. 

Indeed, Australia's Minister for Trade and Investment, Andrew Robb, said consumers will benefit from more affordable Chinese goods such as clothing, electronics and other household items as tariffs are eliminated. 

"This historic agreement with our biggest trading partner will support future economic growth, job creation and higher living standards through increased goods and services trade, and investment. China, with its population of 1.4bn people and rapidly rising middle class, presents enormous opportunities for Australian businesses well into the future," he added.

The entry into force of the ChAFTA rounds out three trade deals sealed by Australia with three of its four largest export markets – China, Japan and Korea – in just over a year, covering 49% of its exports.