【会刊精选】China: A Land of Opportunity（上篇）,公共会计师协会IPA微信公众号文章

As trusted business advisors, accountants are perfectly placed to help clients take advantage of a slew of new free trade agreements with strategic Asian markets. In part 1 of our series, we look at what you and your clients need to know about the upcoming China-Australia Free Trade Agreement.

By Peter Cai

Shane Holloway and Fran Austin, a husband and wife team, run the boutique Delamere winery in picturesque Tasmania. They went to China for the first time last year and were excited about the signing of the declaration of intent for the longawaited China–Australia Free Trade Agreement (ChAFTA).

Holloway believes the agreement presents a good opportunity for Tasmania, the wine industry and boutique vineyards like Delamere. “It is going to present opportunities that we might not have otherwise,” he says. “As an industry, and in particular in Tasmania, it is going to allow much greater flow of food and produce into China.”

However, Holloway thinks the potential benefits of the agreement are likely to be conditional on Chinese on-sellers and distributors passing on the reduced costs to customers. “Prices are inflated. We would expect to see a far greater volume of wines sold in China if we are able to see prices coming back to a more realistic price point in China,” he notes.

Reaping the benefits

China is already Australia’s largest market for agriculture and fisheries, with exports worth about $9 billion a year. Under ChAFTA, this sector has gained unprecedented access to the huge Chinese consumer market. For winemakers like Holloway, tariffs on wines will be gone in four years and winemakers are not the only ones who stand to benefit.

Australian dairy farmers are also big winners under the new deal. Trade Minister Andrew Robb made dairy his top priority and insisted on better terms for Australia than the current China–New Zealand agreement. Tariffs on dairy products such as infant formula and fresh milk will be removed over four to 11 years.

Australian cattle farmers have good reason to smile about the new agreement, too. Beef is a politically charged issue, but Beijing has agreed to eliminate tariffs on beef imports – currently ranging from 12 to 25 per cent – within nine years.

Service with a smile

Apart from big wins in agriculture, major breakthroughs in services sector liberalisation have surprised many analysts.

In financial services, Australian insurers are allowed to access China’s lucrative statutory third-party liability motor vehicle insurance market. China is the world’s largest market for car passengers, adding 20 million new vehicles per year. The agreement will also make it easier for banks to conduct business related to the renminbi (RMB), China’s national currency and one of the world’s fastest growing currencies.

Under ChAFTA, professional services providers such as lawyers and architects will have greater access, as well as better recognition of their qualifications. Unfortunately, there’s no word on direct benefits for the accounting profession in the information made available by the government so far. It is still in the process of drafting the formal agreement, which is not expected for a few more months.

However, there is an interesting provision in the new deal that commits both governments to review bilateral taxation agreement, and this will deal with issues such as double taxation and the prevention of tax evasion. Given the large inflow of wealthy Chinese business migrants to Australia and Beijing’s declared crackdown on tax dodgers, this could become an interesting practice area for the profession.

To be continued

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