chAFTA: What Will it Mean for Australian SMEs

It’s been a big month for Australian politics. With the China-Australia Fair Trade Agreement (chAFTA) closed for formal negotiations and with the recent G20 Summit in Brisbane; the eyes of the world have been fixed on Australia. Australian politics have been rushing to media channels to assure SMEs of the benefits such events will bring to the economy, but what and how much are we actually gaining? While the chAFTA is the largest deal of its kind that Australia has ever entered into which “…accounts for more than $150.9 billion of Australia’s foreign trade” (Keating 2014), breaking it down is necessary to fully understand the gains and losses.

So who are the winners? It’s clear to see that those businesses in service providing capacities are going to greatly benefit from the new found freedom the chAFTA will allow. Health, Insurance, Finance, and Construction services have all been given the green flag. A recent article from Smart Company says that, “Australia service providers are tipped to be the big winners in Australia’s Free Trade Agreement with China…” (Keating 2014). In the same feature, Tim Harcourt, an economics professor from the University of New South Wales believes that, “firms in the architecture, construction and financial services sectors will likely benefit the most from the deal, as will those in key agricultural markets… it will be SMEs who benefit the most from the deal…” (Keating 2014).

With these advantages though, Chinese enterprises will have greater and easier gain to the Australian market, creating a more competitive marketplace. However, the expected rise in demand for employees ‘in the know’ with Chinese protocol and cultural observations will also open doors and opportunities for our rising youth unemployment figures.

Agriculture has also won big for Dairy and Beef, but not everyone is happy. The Sugar industry as well as Rice have missed out. It was recently pointed out in the Financial Review that it’s important to note that, “While some industries on both sides of the agreement will be unhappy at being left out, the deal will be reviewed after three years to take into account China’s rapidly evolving economy, allowing issues such as foreign investment and labour demands to be ­revisited” (Coorey 2014).

A review on the chAFTA from the ABC had an interesting way of putting  how you will actually benefit from  the Agreement, saying that it’s, “…just like in sports or games, FTAs by themselves don’t dictate who wins and losses. That is dependent on how well those taking part play” (Brown, 2014). It’s what you decide to make of the new possibilities enabled to you by the lifting of restrictions and boundaries previously in place. If you decide not to partake, the likely benefits will continue to hang there, waiting for someone else to take advantage. If you do your research and verify what you can do, your plan of action will give you leverage to create a new building block of business opportunities.

SMEs are not the only ones who stand to gain from the chAFTA; the Sydney Morning Herald related that, “Australian consumers will also benefit from the deal. They will enjoy cheaper household goods, electronics and clothing from Chinese companies, while Chinese vehicles and component parts will also be cheaper” (Hutchens 2014).

Overall the outlook is positive; many Australian Industry sectors will have greater flexibility and reach and consumers will have access to more competitive services and products. Nothing is entirely set in stone either. A formal report on the Agreement by Finance for Australian Exporters Department of the Australian Government claims, “While many of the details are still to be finalised (official documents will be signed in 2015), the Government estimates the deal will generate $18b in economic benefits over a decade…”. How much you will benefit will depend on how much you’re willing to do.

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