Acfta

Reasons why Australia-Chile Free Trade Agreement (AC-FTA) was signed Australia and Chile signed the Australia-Chile Free Trade Agreement (AC-FTA) on 30 July 2008. This agreement is signed since the Closer Economic Relations Trade Agreement with New Zealand in 1983 which will liberalize trade and investment between Australia and Chile. The liberalization will be in respect of goods, services and investment, including commitments well beyond both countries’ commitments under the World Trade Organization (WTO) agreement. AC-FTA was signed to eliminate tariffs on most goods immediately, with the remainder to be abolished by 2015. The agreement is expected to enter into force in January 2009. Chile’s economy has grown at an average rate of almost 5.5% a year over the last 15 years. It is estimated to reach a total Gross Domestic Product (GDP) of US$170 billion in 2008. Chile is Australia’s second largest export market in Latin America, with coal, civil engineering equipment, lead, optical equipment and refined petroleum accounting for a majority of exported goods. By the same time, imports from Chile into Australia have also increased by 125% between 2006 and 2007. Majority of those imports are of copper, non-ferrous base metal waste, pulp and waste paper, pig iron and wood. According to the Department of Foreign Affairs and Trade (DFAT) Australia is the fourth largest foreign investor in Chile, with around US$3 billion of direct investment. In fact, Chile already has a number of existing Free Trade Agreements with most Latin American Countries, the European Union, India, USA, Canada, Japan and China. Thus, AC-FTA is signed to put Australia on an equal footing with competitors from these countries, in particular Canadian coal exporters who have increased their market share following the elimination of the tariffs under Canada-Chile FTA in 1997. Therefore, Australian coal exporters will be more competitive and increase their market share in Chile.