A Parliamentary Budget Office (PBO)Estimates report has revealed that recently signed Free Trade Agreements with China, Japan and Korea, will result in a $7 billion loss of foregone tariff revenue over the 2015-16 Budget forward estimates period.
In July this year Greens Senator Peter Whish-Wilson made a written request for an analysis regarding the “Revenue impact of recently-signed trade agreements.”
The PBO responded this month, publishing the Tariff Revenue Impacts of the Korea, Japan and China Free Trade Agreements report.
The PBO report breaks down the three trade agreements, by industry classification, detailing the loss to revenue to from tariffs over the 2015-16 Budget forward estimates period.
According to the report, the Korea-Australia Free Trade Agreement (KAFTA) is estimated to reduce revenue from tariffs by $635m and increase expenses by about $900,000 over the forward estimates.
In April last year Trade and Investment Minister Andrew Robb said in a media release that KAFTA will add $650 million annually to the Australian economy when in full force.
Inquiry into ChAFTA
And according to the PBO report the Japan-Australia Economic Partnership Agreement (JAEPA) is estimated to reduce revenue from tariffs by $1.59 billion over the forward estimates period.
The China-Australia Free Trade Agreement (ChAFTA) is yet to be published in the budget. But the National Interest Analysis that accompanied the ChAFTA agreement shows a loss of tariff revenue for Australia of $600 million in 2015-16 and $4.15 billion over the forward estimates period.
The Senate References Committee on Foreign Affairs, Defence and Trade, has established an inquiry into ChAFTA, with August 28 the closing date for submissions.
FTA enforcement dates:
- The (KAFTA) came into force in the second half of 2014
- The (JAEPA) entered into force on January 15 this year
- The China FTA (ChAFTA) is expected to enter into force later this year, subject to ratification by the Australian Parliament.
John Taylor is an export grants consultant specialising in Export Market Development Grants. He is an active lobbyist for EMDG legislative change.