FTA boon for resources and agribusiness

Australia's recent free trade agreement (FTA) with China has been welcomed by leading directors.

The FTA marks the third such agreement in 2014, following similar deals signed with Japan and Korea earlier this year.

While all three FTAs are of monumental significance to the future economic prosperity of Australia, placing the country on the global economic stage, the recent deal with China is of particular importance, says Graham Bradley AM FAICD, non-executive chairman at HSBC Bank Australia, Stockland Corporation and EnergyAustralia Holdings.

"The China FTA is a ringing endorsement by the Chinese government to its citizens and businesses that Australia is recognised as a good place to do business, to invest and to welcome into China as a business partner," he said. 

"It is much more than your average FTA. It will bring tremendous opportunities beyond our hard commodity trade, especially quality agriculture and a range of services.  It also tells Chinese citizens that we are a good place to send their children for education."

While the short-term benefits of the FTA are likely to be small, in the long term, Australia is likely to benefit from greater capital flows into agriculture, finance, tourism, infrastructure and mining.

Major improvements for dairy and horticulture products are also expected, as Chinese tariffs are phased out over a decade.

Drawing comparisons with New Zealand's dairy industry, Christine Hawkins FAICD, managing director at consulting firm Cinnabar International added that the deal is a "big win" for the dairy and agricultural sectors. 

"If you look at New Zealand's FTA with China, the dairy industry was completely revitalised as a result.. Admittedly there are differences between New Zealand and Australia, but this has the potential to very significant for us," she said. 

Steven Cole FAICD of WA-based corporate and commercial consultancy firm Cole Corporate agrees the resources and agribusiness sectors should see long-term gains.

"Two very significant benefits from a Western Australia perspective would be an investment capital injection into the resources sector, in a current capital starved environment, and agribusiness exports into what has been a tariff protected environment,” he said.