THE IMPACT OF THE AUSTRALIA/JAPAN TRADE AGREEMENT ON AUSTRALIA’S RESOURCES SECTOR
The Japan-Australia Economic Partnership Agreement (JAEPA) was signed on 8 July 2014 which will, amongst other things, provide tariff-free entry for key Australian resources and energy exports. Overall, more than 97% of Australia’s exports will receive tariff free or preferential access to Japan once JAEPA is fully implemented. This article will provide an overview of the impact of JAEPA on the Australian resources sector.
The Japan-Australia Economic Partnership Agreement (JAEPA) was signed on 8 July 2014. Amongst other things, JAEPA will provide tariff-free entry for key Australian resources and energy exports. Japan is Australia’s second largest trading partner and in 2013, Australia’s exports of resources and energy products to Japan were worth an estimated $42.2 billion and accounted for over 80% of Australia’s total exports to Japan. JAEPA delivers substantial benefits to the Australian economy and makes it easier to do business with Japan.
Benefits for the resources sector
Many of Australia’s resources and energy exports to Japan are already tariff free. However, JAEPA will immediately eliminate tariffs from coking and semi-coking coal, non-crude petroleum oils, aluminum hydroxide and titanium dioxide. Once implemented, the majority of Japan’s key resources and energy imports will enter Japan duty free with most remaining tariffs eliminated within ten years. Overall, more than 97% of Australia’s exports will receive preferential access or tariff free access to Japan, once JAEPA is fully implemented.
The impact of the Japan-Australia Economic Partnership Agreement
Key outcomes of JAEPA include:
(a) tariffs of 11.7% on unwrought nickel (unalloyed) to be phased out over seven years;
(b) tariffs of 6.3% on ferro-manganese to be phased out over seven years;
(c) immediate elimination of the 3.2% tariff on coking and semi-coking coal;
(d) immediate elimination of tariffs up to 7.9% on non-crude petroleum oils;
(e) immediate elimination of the 3.3% tariff on aluminium hydroxide; and
(f) immediate elimination of the 3.2% tariff on titanium dioxide.
In addition, JAEPA will raise the Foreign Investment Review Board threshold for Japanese investors from $248 million to $1,078 million for private Japanese originated investment in non-sensitive sectors.
When will the Agreement come into effect?
Australia and Japan are both aiming to complete their respective domestic treaty processes this year, with a view to having the Agreement enter into force by early 2015. With Japanese Prime Minister Shinzo Abe returning to Australia for the G20 summit in November it is likely that JAEPA will be progressed quickly through the Senate Committee for Foreign Relations, Defense and Trade.
Should you require any further information on JAEPA or how it may affect your company, please contact us.
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