Australia to Work on Signing Free Trade Agreement on Coal with China
After Australia and China signed a free trade pact will see Australian coal to be exempted from new import tariffs that is being imposed by China even when the timing of the deal is still to be finalized. Both countries are trying to seal a deal for a free trade agreement before the year ends after ten years of talks and negotiation in a bid to increase two way trade that is said to be worth around A$150 billion.
During the talks, china said that they will be imposing a 3 percent tariff this month on coal that will be used in steel mills and a 6 percent tariff on coal that will be used in power stations which will hit A$9 billion worth of exports from Australia as its mine are already reeling from a slump in coal prices. Once a free trade agreement is signed the tariffs will be abolished. Both sides are keen and more determined to see this through.
China got a quarter of Australia’s metallurgical coal exports for 2014 and about a fifth of thermal coal exports that are used in power stations. the tariffs placed on the coal exports from Australia placed them in a disadvantage against is nearest rival Indonesia which enjoy tariff free based on their free trade pact with China under the Association of Southeast Asian Nations.
Australia is keen on the immediate elimination of the tariffs on coal exports and the Australian Ministry of Trade is seeking to make sure of that outcome as negotiations will conclude by the end of the month.