ChAFTA has mixed results for wood and paper
WITH THE ChinaAustralia Free Trade Agreement (ChAFTA) signed and officially in law, it’s a good time to reflect on what this means for the Australian forest product industries. We are a diverse industry which includes the entire value chain from forest growing and harvesting through to wood and paper products, and this means that the ChAFTA has equally diverse outcomes throughout the industry.
This diversity is evident given the opportunities for tariff reductions for some timber product exports but with the imbalance in tariff reforms for other products such as paper.
The Australian Forest Products Association, as the peak national body for the forest, wood and paper products industry, strongly supports the principles of trade liberalisation in order to remove unnecessary trading barriers and promote greater efficiency, innovation and investment to support global trade. However, we believe it is imperative that these principles are applied equitably and with comparable tariff reduction commitments from our major trading partners in order to deliver these positive outcomes to the entire industry.
China is growing to be a very important export market for forestry products, with free market access for Australian raw material exports including woodchips and roundwood. Over the past decade there has been increasing two-way trade in forest products between Australia and China with rising levels of Chinese imports.
The value of forest product imports from China was over $1.1 billion while Australian exports to China were around $540 million in 2013-14. Australian forestry exports to China have mostly comprised woodchips, round wood and recovered paper which are tariff-free under existing arrangements. By comparison, Australia imports a high proportion of processed forest products from China including sawnwood, wood-based panels and paper as well as manufactured wood products including furniture.
Coming on the back of a similar free trade deal China negotiated with New Zealand, the ChAFTA will now have reduced tariffs for some manufactured wood product exports made from Australian grown radiata pine, including medium density fibreboard. This is great news.
However, the ongoing protection of some sectors deemed to be sensitive for China under the ChAFTA, such as pulp and paper, remains a concern for the Australian paper industry. Paper product exports to China will continue to attract tariffs of around 5% to 7.5% while Australian paper tariffs on imports they are now zero or will be zero over the next 3 to 5 years. This will have an adverse trading impact on the paper industry, and will impede export opportunities particularly for packaging paper.
In 2016, the Association will continue to work to address these unbalanced outcomes under ChAFTA through the 3 year review mechanism, as well as improve trading opportunities for wood and paper products in other trade negotiations including with India and the European Union.