In a rapidly evolving global trade landscape, the importance of strategic free-trade agreements cannot be overstated. For both Australian and Canadian businesses, the prospect of forging stronger economic ties with the Pacific Alliance presents a wealth of opportunities. By delving into existing free-trade agreements and examining potential benefits, businesses in these nations can navigate toward enhanced market access and expanded trade horizons.
Australia and Canada stand to gain immensely from deeper engagement with the Pacific Alliance nations – Chile, Colombia, Mexico, and Peru. At the heart of these agreements lies the promise of reduced or eliminated tariffs on goods originating from these countries, provided all stipulated requirements are met. This spells out a roadmap for Australian and Canadian businesses to tap into vibrant markets across the Pacific, driving growth and prosperity on both ends.
As both Australia and Canada weigh the potential benefits of a comprehensive free-trade agreement with the Pacific Alliance, such a pact could catalyse further economic growth and deepen bilateral relationships. By leveraging existing agreements and exploring untapped opportunities, businesses in these nations are primed to harness the full potential of trans-Pacific trade. In this blog post, we delve into the existing free-trade landscape for Australian and Canadian businesses, shedding light on the pathways to enhanced market access and sustainable growth.
How can a Free-Trade Agreement with the Pacific Alliance Free-Trade benefit Australian and Canadian businesses?
Both Australia and Canada will be able to further benefit from improved market access to the nations of Chile, Colombia, Mexico and Peru, which form the Pacific Alliance. More specifically, this involves either the reduction, or elimination of tariffs entirely on goods that are determined to have originated from Australia and Canada. This will occur, provided that the requirements of the agreed upon free-trade agreements have been adhered to.
What are the existing Free-Trade Agreements that Australian businesses can already take advantage of?
Australia has already negotiated a free-trade agreement with Chile, which has been in place since 2009. The Australia-Chile Free-Trade Agreement provides Australian businesses with a significant incentive to export their goods into the Chilean market, as this agreement has eliminated tariffs on Australian goods entirely since 2015, with the only exception being sugar. This elimination of tariffs is subject to a valid Certificate of Origin being provided, which meets the minimum requirements as specified in Annex 4-A of the agreement (Australia free-trade agreement, annex 4-A). Also, there are Rule of Origin requirements that must be met, so that Australian businesses can benefit from the elimination of tariffs under this agreement.
Most recently, Australia has also negotiated a free-trade agreement with Peru, which has been in force since 11 February 2020. Australian businesses should also seek to take advantage of this free-trade agreement, as this ensures that Australian businesses can benefit from the elimination of tariffs on most goods imported into Peru. Some goods exported to Peru from Australia may still be subject to tariffs however, these will be reduced significantly, when compared to having no free-trade agreement. In order for Australian businesses to determine whether the goods they wish to export to Peru can access the benefits under this agreement, they can consult the FTA portal to determine their eligibility. A key similarity that the Australia-Peru Free-Trade Agreement has with the Australia-Chile Free-Trade Agreement, is that Australian businesses must ensure that a valid Certificate of Origin is provided for the goods that they are intending to export to Peru, so that they can access the benefits of either the reduction, or elimination of tariffs on such goods.
In addition, as Australia is also a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP), Australian businesses can also take advantage of this free-trade agreement, as Chile, Mexico and Peru are members of this group. As Australia does not yet have a free-trade agreement with Mexico directly, Australia’s membership within this partnership means that Australian businesses can still take advantage of the benefits of tariffs either being reduced, or eliminated, on a wide variety of goods.
How can Australian business find information on if their exports are covered by FTAs?
Based on Australia’s existing free-trade agreements with Chile, Mexico and Peru, Australian businesses can consult the FTA portal, to determine if the goods they wish to export to these nations are covered. Australian businesses will also find that the portal is useful, in also providing information about the documentation, and origin requirements that need to be met so that they can take advantage of these favourable trading conditions. The link for this portal is available at: www.ftaportal.dfat.gov.au
What would the benefits be for Australia in complete a free-trade agreement with the Pacific Alliance?
Australia should seek to complete a free-trade agreement with the Pacific Alliance, as Australia currently does not have any free-trade agreements with Colombia. This means that Australian businesses are missing out on the benefits of having tariffs being reduced or eliminated on goods exported from Australia into Colombia. In addition, this would allow Australia to further build upon the trading relations that it has established with Chile, Mexico and Peru, and ultimately benefit Australian businesses seeking to export to these countries.
What are the existing Free-Trade Agreements that Canadian businesses can already take advantage of?
In comparison to Australia, Canada has been able to negotiate free-trade agreements with Chile, Colombia, Mexico and Peru separately. Furthermore, Canada is also a member of the CPTTP, which further strengthens Canada’s relations with Chile, Mexico and Peru. Because of this, Canadian businesses enjoy a greater level of access to the Latin American market, and can already take advantage of having tariffs being reduced, or eliminated from goods exported from Canada. Canada has a significant incentive to complete a free-trade agreement with the Pacific Alliance, based on the existence of these free-trade agreements.
Conclusion
The path towards deeper economic collaboration between Australia, Canada, and the Pacific Alliance nations is illuminated by the existing framework of free-trade agreements. As businesses on both sides harness the opportunities afforded by reduced tariffs and enhanced market access, the potential for mutual growth and prosperity becomes increasingly apparent. By seizing the momentum generated by current agreements and exploring the possibilities of future partnerships, stakeholders stand poised to unlock new avenues of trade, innovation, and shared prosperity across the Pacific region and beyond.
Harris Gomez Group METS Lawyers ® opened its doors in 1997 as an Australian legal and commercial firm. In 2001, we expanded our practice to the international market with the establishment of our office in Santiago, Chile. This international expansion meant that as an English speaking law firm we could provide an essential bridge for Australian companies with interests and activities in Latin America, and to provide legal advice in Chile, Peru and the rest of Latin America. In opening this office, HGG became the first Australian law firm with an office in Latin America.
As Legal and Commercial Advisors, we partner with innovative businesses in resources, technology and sustainability by providing strategy, legal and corporate services. Our goal is to see innovative businesses establish and thrive in Latin America and Australia. We are proud members of Austmine and the Australia Latin American Business Council.
