Australia is one of the first countries to launch negotiations for a free trade agreement with the Pacific Alliance – the Latin American trading bloc made up of Mexico, Chile, Peru and Colombia.
Trade Minister Steven Ciobo says the government is seeking “a comprehensive, high quality agreement to open new markets for Australian exporters” in the region.
“An FTA with the Pacific Alliance will create new export opportunities for Australian farmers, miners, manufacturers, educators, service providers and investors in some of Latin America’s major economies,” says Mr Ciobo.
“Importantly, this FTA will open the door to Mexico for Australian exporters.”
The combined Pacific Alliance GDP was worth more than USD$1.8 trillion in 2016 and the four countries account for 38 per cent of Latin America’s population and 57 per cent of its total imports. Pacific Alliance Members imported goods and services worth more than US $600 billion in 2016.
Australia’s ability to capitalise on this demand is limited by high tariffs that block trade, says Mr Ciobo.
Tariffs of up to 80 per cent are imposed on Australian beef, while dairy products attract tariffs of up to 45 per cent and sugar attracts tariffs of more than 30 per cent. Australia’s services exports – including education and mining services – also face competitive barriers.
Mr Ciobo says an FTA will bring down these barriers and ensure Australian businesses have competitive access.
“Australia’s experience negotiating with three of the Pacific Alliance members positions us well to conclude an agreement relatively quickly,” he said.
Australia is well advanced in its negotiations for a free trade agreement with Peru, which will complement and reinforce the Australia-Pacific Alliance FTA.
The government also recently launched FTA negotiations with Hong Kong and is aiming to forge an FTA with the European Union post Brexit.
And Mr Ciobo is confident the government will soon conclude an agreement with Indonesia after negotiations were relaunched last year.
More jobs for Australians
Meanwhile, the Australian Business Council has welcomed the announcement of the launch of free trade agreement negotiations with the Pacific Alliance.
Business Council chief executive, Jennifer Westacott said an FTA with Pacific Alliance countries can deliver increased exports for Australian companies, more jobs for Australians, and investment and innovation that is driven by a growing economy.
“Australian exporters of agricultural products, aluminium products, mining equipment, pharmaceuticals and paper are especially well placed to benefit from better market access that comes with FTAs,” Ms Westacott said.