Introducing 

Prezi AI.

Your new presentation assistant.

Refine, enhance, and tailor your content, source relevant images, and edit visuals quicker than ever before.

Loading…
Transcript

China-Australia Free Trade Agreement & Power

The China-Australia Free Trade Agreement (ChAFTA) is an agreement that allows for increased trade and benefits to both nations, mostly through trade liberalisation.

While most of the agreement allows for two-way benefits, some provisions and coverage are clearly skewed towards one side.

We believe this is due to power imbalances during the negotiation process.

Benefits For Australia

Benefits for China

- 85% of tariffs removed immediately, including tariffs on coking coal

- Tariffs removed on 95% of exported goods within 3 years

- Benefits to the resource industry alone estimated at $1.3b per year

- CRISCO accredited tertiary institutions can become officially registered on Chinese bulletins

- Eliminates 25% and 30% tariffs on Australian Dairy and Wine respectively

- Coverage will cover 99.9% of Chinese Investment

- Maximum allowable investment increased from $248m to $1.078b before review by FIRB needed

- Increased ability for labour mobility, and a cheaper workforce for Chinese projects

- ISDS provisions, which allow China to sue Australia for changing legislation that negatively impacts Chinese businesses (2 way, but unusual).

The Negotiation

- Began in 2005 and were finalised on 17th November, 2015

- Took 21 rounds of negotiation.

- Difficulties include physical distance, language and cultural barriers, and different interest from negotiation outcomes.

Jenniffer Westacott: "The ChAFTA is a transformative moment for the Australian Economy..."

Thanks for Watching :)

Any questions?

Dependency Power

Australia Exports $107b of goods and services to China, and Imported $52b of Chinese goods

This trade accounts for nearly 25% of Australia's total trade, however, only 7% of China's total trade.

Because Australia needs China's trade more than China needs Australia's trade, China is more powerful.

The biggest areas at risk from falling Chinese growth are resource goods and education services. When negotiation the ChAFTA, Australia's interests were in protecting these important industries from falling demand. China, conversely, wanted to protect its own growing producers from the higher quality, often cheaper Australian Substitutes.

BATNA Power

Maximum investment levels increased from $248m to $1.078b before analysis by FIRB needed.

Industries that missed out include sugar, wheat and rice.

In addition, Australia will now have to include ISDS provisions with Japan.

Only 95% of Australian exports will be covered, compared to 99.9% of Chinese.

Labour mobility provisions will replace Australian Workers on Chinese developed project.

However, as will be demonstrated, China was better able to leverage their power to achieve benefits.

How did China leverage Power over Australia?

However, we believe that China did not utilise their power balance as much as they could have...

In order to preserve an international relationship.

ChAFTA negotiations really sped up when China's economy slowed down.

Australia was desperate to protect their resource and education industries.

China was able to take advantage of this by including provisions which, under normal circumstances, may not have been included.

Power can be derived through an alternative to an agreement.

China's demand for resources, particularly coal, has been on the decline since 2012.

No suitable replacement market exists. The next fastest growing economy (India), is still not growing fast enough and has sufficient resources of its own.

Because the Australian economy is strongly supported by Chinese demand for resources, China has more power.

Forms of International Power

2 Main Sources of Power used while negotiating the ChAFTA

1) Dependency Power

2) Alternative Power

However, use of power had to be moderated to maintain complex international relationships

Learn more about creating dynamic, engaging presentations with Prezi