UTS-Australia China Relations Institute event
I thank theAustralia-China Relations Institute [ACRI] and the University of TechnologySydney [UTS] for their initiative in bringing us all here together today – areal pleasure to see so many faces keen to participate in this conversation.
At the outset I want toacknowledge of some of the unsung heroes who delivered the agreement we willdiscuss today.
Trade agreements do notnegotiate themselves.
ChAFTA was the result of21 rounds of tough and difficult negotiations over nearly a decade involvinghundreds of officials from both countries.
In Australia, it involvedhundreds of formal submissions and more than 700 direct consultations withstakeholders.
So I want to formallythank officials from both sides for their effort, their endurance and the highquality of the result of their endeavours.
And of course I pay aspecial tribute to the outstanding contribution of my predecessor, Andrew Robb.
In bringing the deal homeAndrew overcame the obstacles and naysayers to achieve a historic outcome – hewas able to negotiate the most liberalising free trade agreement China hasdelivered to date.
It's a high quality dealand our exporters – small, medium and large – have responded.
Two and a half yearssince the deal was signed, it is an ideal time to take stock of the dividendthat ChAFTA has delivered for both countries.
I am pleased to report that our two way trade with China isat record levels – two way trade reaching $183 billion in 2017.
Our goods exports to China grew by 22 per cent last year.
Our exports of wine, milk powder and skin care productsmore than doubled.
Our nickel exports quadrupled.
And our exports of lobster, and table grapes greweight-fold.
We now export more to China every 6 weeks than we do to theUnited Kingdom in a year.
Our trade with China is more diverse than ever.
Our serviceexports to China are now greater than those to the United States and the UnitedKingdom combined.
China hasbecome the largest single export market for a range of Australia's manufacturedfood items.
Our trade with China is more open than ever – 98.5 per centof Australian goods enter China duty free or under preferential rates.
It is not just the trade numbers that are strong.
The people to people relationship could hardly be stronger.
185,000 Chinese studentsstudied in Australia in 2017.
1.4 million Chinesevisited Australia in the year to March.
That looks to me like arelationship that is flourishing.
Thekey ingredient to the success of the relationship is that both sides benefitfrom this economic relationship.
China'sgoods exports to Australia have grown 13-fold since 2000.
And Australia provides a reliable supply of high-quality agriculturaland mineral products and a source of highly competitive services (healthcare,education) to China.
As well as a stable location for China's investment.
That investmentrelationship has grown strongly in both directions in recent years.
Chinese investment inAustralia has grown from negligible levels 10 years ago to reach $40.7 billionin FDI at the end of 2017.
Australia's investment inChina is also growing strongly.
An example of this growthis the commitment to China made by architectural and consulting firm WoodsBagot.
The Chinese market hasbeen a staple of their business for many years.
Founded in Australia, thefirm's history spans more than 120 years, since 1896, to what are now some ofthe oldest features of the Adelaide skyline.
Already established inthe Chinese market, ChAFTA nonetheless has brought renewed advantages to WoodsBagot – promoting Australian industry standards, reducing red tape barriers,and allowing for deeper collaboration across borders.
Just this month, WoodsBagot have announced that they have received local approvals for a ten-yearproject in Zhuhai, China – the transformation of an old, unused sugar factoryto repurpose as a cultural park in celebration of the region's heritage.
I also note that therecent Westpac Australia-China Business Sentiment reported that 83 per cent ofbusinesses reported a positive outlook for their China operations over the nextfive years.
Thebottom line is that ChAFTA is delivering results for both economies andprovides the foundation for future growth.
This growth is consistentwith the vision articulated by Chinese leader Xi Jinping at Davos last yearwhen he said that "in the face of both opportunities and challenges of economicglobalization, the right thing to do is to seize every opportunity, jointlymeet challenges and chart the right course for economic globalization."
That is exactly what ourtwo countries have achieved with ChAFTA.
ChAFTA has created anenvironment that enables both Australian and Chinese companies to makecommercial decisions – in the interests of their own profit margins, in theinterest of the jobs that they provide, and in the interest of a strengthenedbilateral economic relationship.
That is the dictionarydefinition of a "win-win."
These days, when youtravel around China, you can spot Australian products just about everywhere.
The Chinese supermarketchain April Gourmet has seen a jump in demand when it comes to Australianproducts.
In their stores inBeijing, you can see shelves of familiar packaging – boxes of Carman's mueslibars, tubs of Farmer's Union yoghurt, jars of Mayver's crunchy peanut butter.
Products like beef,regional honey, cheese, biscuits and bottles of wine that I'm sure we would allrecognise.
This is what ChAFTA lookslike in real life.
For citrus farmer RobertHoddle, Director, Gunnible Pastoral Company, it has been a life changer.
His family orchard sitsan hour out of Tamworth – near the town of Gunnedah, in country New SouthWales.
For 12 years, Robert hadbeen producing Salustiana oranges for both domestic and overseas markets – butit was only after ChAFTA entered into force that he began to export into China.
In just over a year,Robert's orchard was overwhelmed with demand – tripling its orange exports from100 to 300 tonnes.
So what was it that ledRobert to the Chinese market, and to the sudden boom in his business?
Simple – before ChAFTA,Australian citrus exports to China faced a tariff of 11 per cent.
Under ChAFTA, that tariffhas reduced to 6.1 per cent – increasing demand from the Chinese market, andincreasing profit flows into Robert's business.
In fact, there is afurther tariff reduction to take effect on 1 January 2019 – and by 2023, thattariff will have been completely eliminated.
Along with thesereductions, ChAFTA has also made it easier for Robert to understand the processfor sending his goods to China – clarifying export regulations and reducing redtape.
This has breathed in newlife, back in Gunnedah and in dozens of orchards across the country.
In fact, Australianexports of oranges to China have grown by 137 per cent since ChAFTA came intoforce.
Robert has benefittedfrom Australia's natural advantages over other major citrus producing countries– Australia is closer to China, and can deliver shipments much faster.
Being in differenthemispheres, Australia is counter-seasonal to China.
What we produceseasonally here is the opposite to what Chinese growers and our other northernhemisphere competitors can produce at the same time.
What is more, Australiahas built a reputation in China for delivering quality produce, a gift of ourbeautiful environment and our clean air.
The Chinese market isgrowing each year – but it isn't just citrus exports reaping rewards.
Services providers are alsoseeing pathways into the Chinese market – banks and insurance providers, lawfirms, providers of education, health care, aged care.
Commitments on theseservices sectors, under ChAFTA, provide better market access and increasedcertainty for Australian providers – but we need to make sure that Australiansknow how to take advantage of these changes.
We want to work towards aposition where every Australian business can benefit from the opportunitiesthat we have created.
This is an absolutelycritical responsibility, as far as I'm concerned.
We are focused as well onexplaining the mechanisms of our existing free trade agreements for the benefitof small and medium enterprises.
You may be familiar withthe interactive online FTA Portal launched recently by my Department in 2016 –information on all our FTAs, readily available to any business owner with aninternet connection.
Add to that theface-to-face communication initiatives – FTA information seminars – conductednot only by my Department and by Austrade, but also by key industry partners.
In April, I personallydelivered the 100th such FTA information seminar over on the GoldCoast.
It's a symbol of theGovernment's commitment; making sure that each and every Australian exporterknows the FTAs are for them.
The lasting value ofChAFTA will depend squarely on how easily its opportunities can be accessed bythe average Australian.
While ChAFTA negotiationswere long and hard I am thrilled with what our two nations have achieved.
Yet no free tradeagreement is a set-and-forget exercise.
ChAFTA captured our twonations' interests and priorities at a particular point in time – but it is aliving agreement, and it is my job to make sure that its terms remain relevanttoday.
ChAFTA includes a numberof built-in review mechanisms to ensure the Agreement keeps building on itsoutcomes and delivering improved market access for our respective countries.
Reviews of ChAFTA'sservices and investment chapters have already started.
Our approach is built onthe stories we hear from Australian businesses and investors – their successesas well as the challenges they continue to face.
These reviews are a stepin better understanding and responding to ChAFTA and its lived experience.
Once concluded, I expectto move quickly into negotiations with China to update and improve thesechapters – and there, I have two priorities.
Number one: to make surethat we are creating new opportunities in sectors of priority interest forAustralian services suppliers.
Number two: to make surethat we create the conditions for increased investment flows to both of oureconomies.
It's important we makesure that both our nations continue to develop the absolute best agreementpossible.
ChAFTA also mandates abroader general review – something both Australia and China have committed toundertaking by the end of this year.
The general review willprovide us with an opportunity to consider other aspects of the Agreement.
It won't be the last timewe see ChAFTA grow and evolve – both sides have committed to a general reviewevery five years.
Another key issue on ouragenda is the Belt and Road Initiative (BRI) – we welcome projects that havethe potential to make a positive contribution to Asia's growing infrastructureneeds.
We support involvement inBRI projects on a case-by-case basis on commercial merit and where there is aclear trade or investment opportunity for Australian businesses.
As you know, I will leadan Australian business delegation to the BRI-focused China International ImportExpo (CIIE) in Shanghai in November 2018.
The CIIE will provideAustralian exporters with an opportunity to network with over 150,000 Chineseimporters and an Australian Government sponsored National Pavilion will supportkey Australian industry bodies in showcasing their capabilities.
I am certain that Australia's participation in China's signature CIIEevent will help to create additional positive momentum for our bilateral tradeand investment relationship.
At a time when globaltrade is marked by uncertainty, it is particularly important to rely onstrength and stability in our trading relationships.
Opening new and furtherexport opportunities for Australian businesses is one of the core objectives ofthe Turnbull Government. We know liberalised trade and investment driveseconomic growth and drives job growth in Australia.
The most recent nationalaccounts have further reinforced the fundamental truth of this statement. Overthe past five years, export growth has been responsible for driving a fullthird of Australia's GDP growth. And in the context of creating businessconditions conducive for more than one million Australians to secure a job,it's clear the Coalition's new free trade agreements have been a key driver.
I've alreadyspoken to two examples of Australian businesses who are growing because ofdeals exactly like CHAFTA. There are so many more.
Theseexperiences galvanise the Government's commitment to liberalising trade andinvestment. I acknowledge, however, this commitment is juxtaposed against anincreasingly troubled global trade and investment landscape.
Bold moves bythe United States to address the President's concern over the US goods tradedeficit, including tariffs, quotas, and investment restrictions, are triggeringretaliatory action by a number of major markets such as the European Union,Canada, Mexico, and China.
I stand firmon Australia's behalf as a contrary voice. I note, importantly, not a lonevoice. The resilience and commitment of the eleven nations that recentlyconcluded the TPP-11 attests to that.
President Xi's repeateddesire to continue opening China to trade and investment is an ambitionAustralia and China can continue to achieve together. CHAFTA has withstood theuninformed criticisms and withstood the deliberate mischief from multiplequarters. We are now poised to build on this success by broadening CHAFTA witheven more opportunity for both Australia and China.
There will be discordantvoices, and certainly Australia and China do not see eye to eye on all aspectsof our world view, however these differences do not, and should not, affect ourability to grow co-operation, dialogue, and people to people links.
Australia and China bothknow strong trade and investment bonds promote prosperity, peace and stability.We can both reinforce this knowledge by demonstrating through CHAFTA our commonobjective.
ChAFTA is by no means apanacea for every trade issue.
Ladies andgentlemen, I am not suggesting that there are no issues in our bilateralrelationship.
I can thinkof no trading partner with whom we do not have differences of opinion onoccasions.
But ChAFTA puts enormousballast in our bilateral relationship.
It provides a range ofmechanisms for talking to China about trade – and this can only be a goodthing.
We are still in the earlyyears, but rest assured I will keep working hard for ChAFTA, I will keepworking hard for the free trade agenda, and I will keep working hard forAustralians.
Whatever the futureopportunities might be, we must make sure that we are well equipped to make themost of them. Thank you.