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Canada-Australia Free Trade Agreement: What You Need to Know

The Canada-Australia Free Trade Agreement (CAFTA) is a bilateral trade agreement between Canada and Australia that aims to reduce barriers to trade and investment between the two countries. The agreement was signed in principle in 2017 and entered into force on August 1, 2021, after both countries completed their domestic procedures for ratification.

The CAFTA covers a wide range of trade and investment topics, including goods, services, investment, government procurement, intellectual property, technical barriers to trade, competition policy, and sustainable development. Some key features of the agreement are:

– Tariff elimination: The CAFTA eliminates tariffs on almost all industrial goods immediately upon entry into force, and on most agricultural and seafood products over time. Some sensitive products, such as dairy, poultry, and eggs, are subject to limited quotas or tariff reductions.

– Rules of origin: The CAFTA sets rules of origin to determine whether a product qualifies for preferential tariff treatment based on its origin and content. The rules vary by product and sector, but generally require that a certain percentage of the product`s value be added in Canada or Australia, and that certain inputs or processes be performed in one or both countries.

– Services and investment: The CAFTA includes provisions that facilitate trade and investment in services, such as telecommunications, financial services, and professional services, by removing or reducing regulatory barriers. The agreement also protects investors from both countries against expropriation, discrimination, and unfair treatment by the other country.

– Government procurement: The CAFTA opens up opportunities for Canadian and Australian suppliers to bid on government procurement contracts in each other`s markets, subject to certain conditions and thresholds. The agreement also promotes transparency, non-discrimination, and fair competition in government procurement.

– Intellectual property: The CAFTA includes provisions that strengthen the protection and enforcement of intellectual property rights, such as patents, trademarks, copyrights, and trade secrets. The agreement also facilitates cooperation and information sharing between the two countries on intellectual property issues.

– Technical barriers to trade: The CAFTA addresses technical regulations, standards, and conformity assessment procedures that can affect trade in goods, by promoting mutual recognition, harmonization, and transparency. The agreement also establishes a joint committee on regulatory cooperation to facilitate dialogue and exchange between the two countries.

The CAFTA is expected to benefit both Canada and Australia by expanding market access, promoting economic growth, and creating new opportunities for businesses and consumers. According to a joint study conducted by the two countries in 2017, the CAFTA could increase bilateral trade by up to 20% and boost GDP by up to CAD 1.7 billion for Canada and AUD 680 million for Australia over the long term.

Some sectors may be more affected by the CAFTA than others, depending on their competitiveness, comparative advantage, and exposure to trade liberalization. For example, Canadian exporters of forest products, energy, and machinery may benefit from increased access to the Australian market, while Australian exporters of wine, meat, and education services may benefit from increased access to the Canadian market. However, some domestic producers may face increased competition from imports, especially in sectors that are sensitive to labour, environmental, or social standards.

To take advantage of the opportunities and mitigate the challenges of the CAFTA, businesses need to understand the rules and procedures of the agreement, assess their own competitiveness and capacity to comply with them, and seek advice and support from government agencies, industry associations, and trade experts. The CAFTA is not a panacea for all trade-related issues, but it can be a useful tool for enhancing Canada-Australia relations and expanding mutual benefits.

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