CHAFTA: Objectives, Achievements, And Impacts On Australia - An Essay.

ChAFTA stands for the China-Australia Free Trade Agreement. Answer the following questions:

1. Describe how free trade agreements are created, and their legal status at an international level.
2. Discuss the history of ChAFTA.
3. Explain the objectives of ChAFTA and how ChAFTA attempts to its achieve its objectives?
4. Analyse the benefits and any drawbacks for Australia because of ChAFTA.
5. Solve the issue as to whether ChAFTA can be enforced against either China or Australia for breach of agreement.

Compare and contrast how international commercial disputes are resolved in the ICJ (International Court of Justice) and the DSB of the WTO (Dispute Settlement Body of the World Trade Organization), with the High Court of Australia, and the ACICA (Australian Centre for International Commercial Arbitration), using case examples.

Question 1

According to Chapter 1.1of CHAFTAof 2015 states that a Free trade agreements are entered into when the parties in the agreement as in consistent with the provisions of the so said articles detailed therein agree to establish a free trade area.

CHAFTA provides that free trade agreements are recognised as forming part and relating to other agreements that could the parties involved are party to and by that the parties affirm their existing commitment to each other.

Article 1.2(2) of CHAFTA stipulates that recognition of such an agreement will be under only under the principle that the details and content of such an Agreement conforms to and does not derogate nor seem to violate provisions of any other agreement that the parties may be have entered into.

Article 1.2(3) of CHAFTA also provides that this the agreement will be legally binding to any international value and that the Parties herein with the required immediacy consult with a in order to find satisfactory solution that is mutual in case of emergence of inconsistencies in relation to other agreements to.

The Agreement was a result of diplomatic and economic engagements between the representatives of the Peoples’ Republic of China and the Prime Minister of the government of Australia. It came into force after the completion of 21 rounds of negotiations between the two governments that was held in Beijing on between 1^st and 5^th of September 2014(DFAT, 2014)

The agreement was adopted on the 20^th, December of 2015. A deal to adopt this agreement was completed and released to the public on 17^th November 2014 through a joint press Statement. After a decade of its first round of negotiations that began in Sydney on 23^rd of May 2005(Department of Trade and Foreign affairs, 2005). On 17^th of June 2015, this agreement was signed.

Objectives of CHAFTA and how CHAFTA attempts to its achieve its objectives

Chen& Li(2015), CHAFTA assigned was meant to bring some of these benefits and opportunities to the parties; lifting of Foreign Investment Review Board (FIRB), access for Australian financial services, and increased labor mobility among others. 

In this discussions the below are discussed as the merits that Australia has been able to drive.

Lifting of some of the requirements of review board for Investment from Foreign Companies

The agreement aimed at providing for lifting of the FIRB thresholds for Chinese investors and allowing an increment of FIRB monetary threshold to $1,094million right from  $252million so as to much those of  investors from the USA, Japan and Korea. The agreement also provided for lowering investment thresholds of Agricultural land and agribusinesses.

 Access for Australian financial services

Chen& Li(2015) point out that as outlined in this agreement, Australian financial institutions were to be allowed to operate in China. Access to Chinese market has given unparalleled opportunities to providers of financial services from Australia to exploit.

Labour mobility

Chen &  Jiayue (2015), in Hall & Cox website argue that the ChAFTA aimed providing opportunityfor movement of workers from China into Australia and that it was to be operational within a framework of the existing 457 visa system and which could be subject to change.

Question 2

Most favoured nation’ (MFN) clause

Chen & Li(2015) point out in the Hox & Cox website that ChAFTA provided for a MFN clause which meant that Australia could also benefit from terms that are deeming favourable if China would choose to enter into another agreement with a different party.

Holiday and working visas

In the agreement it was established by estimates that there would be close to over 200million of China population moving around the world by 2020. This informed the terms of agreement that saw Australia scrap its three year holiday visa limitation and extend it to ten years. This meant that Australia would gain an increased influx of international tourist from China. ChAFTA recognized the importance of this for Australia .

Chafta Attempts To Achieve Its Objectives

According to the Factsheet, ChaFTA has so far attempted to achieve its objectives in the following spheres (Department of Foreign Affairs of Australia, 2017).

For Australian good Exporters

ChaFTA meant that there would be increased entry of Australian products to Chinawith no imposition of tariff.Agricultural exports such as sheep-meat, dairies, beef, wine, and wool were exported with no restriction on tariff.

The Factsheet details that ChaFTA was envisioned that China would provide a market for the agricultural products from Australia.

For Australian services suppliers

Since the enforcement of the agreement, in 2016 alone the exports in services to China has been valued at $11.3 billion, this puts China as the largest market for Australia's services. In ChAFTA, Australian banks, insurance providers, as well as security providers.

Under the Most-Favored Nation (MFN) clause Australia stand a chance to gain a protection if China will continuously extend beneficial treatment to other parties.

For investors

According to the report on the website of Department of Foreign Affairs of Australia (2017), ChAFTA has improved chances for the two. Australia has continued to protection of the competitive position of her businesses in China on a growing scale.

For Australian consumers and businesses

Australia is progressively eliminating remaining Australian tariffs on Chinese imports in order to comply with other bilateral trade agreements (Department of Foreign Affairs of Australia, 2017)

Business and skilled worker mobility

 The report in the website of Department of Foreign Affairs of Australia(2017) presuppose that So far CHAFTA through improved temporary entry access within the two countries’ existing migration and employment schemes and safeguards and through the reduction of  barriers to labor mobility has seen increased business flow for the two parties.

Work and Holiday Arrangement

Complementarily, the two countries have been able implement an immigration arrangement granting increased demand for tourism services thus helping boost tourism in Australia. Especially the rural parts of the same.

Benefits And Any Drawbacks For Australia Because Of Chafta

A news website illustrates the benefits and drawbacks that Australia has gained from the ChAFTA since its adoption.It discusses this in terms of pros and cons looking at potential benefits and the drawbacks the country have faced (ABC News, 2015)

Benefits for Australia:

• Consumers have been able to acquire cheaper Chinese priced manufactured products such as electronics and white goods on cheaper prices.
• Over a period of two years, there has been an elimination of tariffs on various commodities such as coal, and alumina gemstones.
• Australia has been able to benefit from an ongoing four year plan to reduce  tariffs of 3-14 percent between on her various manufactured exports
• Australian firms has been enjoying the privilege of guaranteed wholly-owned subsidiaries tourism and hospitality operations in China.
• Australia has gained exclusive rights to collaborate with companies from China for both financial and legal and services with competitive edge of owning up to 49% of joint ventures.

Drawbacks for Australia:

• The discretionary power by China to impose additional custom dutiesundermines authority of Australian exporters.
• The raising threshold for review by board on Investment by Foreign Companies for the screening of investments from China in sectors other than telecoms or agriculture may present a bleak future Australian businesses.
• The existence of rights to by Chinese firms to sue Australian firms is adversely affecting Australia’s commercial interests
• The influx of Chinese labour force poses a big challenge to Australia’s labour market.

Yes ChAFTA can be enforced against either China or Australia for breach of agreement. Article 9.11(1)(b) provides that personal claiming will deliver written request to respondent for consultations of measurements of a said dispute or breach of alleged provision the agreement., p-92

Objectives of CHAFTA and how CHAFTA attempts to achieve its objectives

Article 9.11(5) of ChAFTA provides the respondent herein (the party whom claimed has been levelled against) has an obligation upon receipt of the notice for consultations within 30 days to measure and respond to the alleged matter, pg-92

Article 9.12.2(a) of ChaFTA provides the claimant may submit to arbitration body or panel under this Section a claim is a based on, pg-93.

Article 15.14(2) provides that Pursuant to Article 15.13(1) and (2) a tribunal provides its determination. This therefore means that if a party is found culpable then a penalty will be issued against the respondent pursuant to Article 9.22.1, 2 and 3( pg-105).

All these illustrations therefore shows that ChaFTA is legally binding to the parties and that a party shall be held liable if culpability is established for breach of agreement.

According to Turki (2009) the comparison between different avenues for resolving international commercial disputes can take value in the following forms; in terms of the methods involved, the rules and procedures within the said legal regimes, and jurisdiction and scope of the said institutions.

Noonan. (n.d)  argues that matters arising from an internationaldisputes that is commercial in nature are settled through three major means methods; arbitration, agriculture,and consultation.

In this discussion I will majorly dwell on Litigation.

Litigation

It involves taking a matter to court before a judge. ‘International commercial litigation’ describes international disputes in a commercial setting requiring a settlement.

On domestic disputes, the matter is taken to Domestic courts whichmay apply international law applied through international conventions (e.g. CISG), customs and incoterms.

Voth v Manildra Flour Mills (1990) it was established that Domestic courts could apply internationally available mechanisms to solve conflicts.

In hearing a case a court has to either adjudicate the dispute or to enforce a foreign judicial or arbitral judgment. And while adjudicating a dispute, a court of law must determine the jurisdiction, resolve the dispute with appropriate judicial personnel and applying appropriate law, both domestic and international.

In Supermicro Computer Inc v Digitechnic,(2001), it was held an event that a case is unsettled under another court of different jurisdiction a domestic court may decline to exercise jurisdiction.

Enforcement: a court may choose not enforce an international treaty or foreign obligation

The actions of courts have been over limited by the existing conflict of laws means of different countries in terms of the competing jurisdictions, cross vesting of jurisdiction, choice of judgement’ and ‘choice of law’, aappropriateness of a court jurisdiction on a foreign matter and ‘Substantive law’ and ‘procedural law.’

Jurisdictional issues are determined by courts of law and can be invoked as a right in a domestic situation in which the court determines if it has jurisdiction. If jurisdictional issue exists the appropriateness is therefore taken into account based on; convenience, the balancing test and advantages and disadvantages. As established in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) decided that an existence of a consensual resolution in place that would override its jurisdictional mandate.  And when real conflicts of law exist then the doctrine of non convenienscan be employed by a local court whether stay orders can be granted in favour of a local court over a foreign court in local processes.

Chafta Attempts To Achieve Its Objectives

And in determining the existence of substantivelaw, it must acknowledged in Bank of India v Gobindram Naraindas Sadhwani (1988), the court upheld that an express choice of the governing law having found it legal under the local law or public policy in order to establish the liabilities and rightsof parties in the dispute and that such a law would not be merely declined on grounds of imprecision or discretion.

Local courts can also enforce foreign either by adopting it or failing to adopt pursuant to the local law. Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) provide a classic example when Australian  legislation may enforce judgments.

Consultation:  similar to negotiation, an exchange of arguments and presentations without an adversarial approach. Consultation is sometimes embraced by parties and most treaties provide for it including ChaFTA.  In the event of an alleged breach of a treaty or an agreement parties are always advised to consult before seeking the services of an arbiter.

Arbitration: the use of impartial party to act arbitrator in a dispute. The parties choose the place and time for the hearing, whether to be bound by procedural rules, the arbitrator.  Most international commercial disputes are resolved through arbitration or mediation, the International chamber of Commerce of the ICJ and the Dispute Settlement Body of the WTO employ arbitration as the main approach to resolving disputes among conflict bodies or even states.

Kumar (n.d), argues that Australia Alternative Dispute Resolution has largely been a non-judicial function as Victoria Courts seek Mediation is the main form of ADR used in Australian Courts (Victorian).  He also asserts that the following are the types of Alternative Dispute process that exist in Australia.

• Facilitative approach with a help of an arbiter parties develop and consider alternative resolutions to their conflict.
• Advisory approach involving appraisal of case appraisal, conciliation, and neutral evaluation.
• Determinate processes including mediation, conciliation, facilitation and facilitated negotiation.
• Negotiation – for example lawyers and agents.

Unlike the courts where lots of litigation take place, institutions such as the International Court of Justice and the Dispute Settlement Body of the World Trade Organization and the ACICA Australian Centre for International Commercial Arbitration embrace arbitration as an effective tool for resolving commercial conflicts. In these three, the arbiter for the parties sets rules of engagement and arbitration. The rules act as the common playground for each party to lay their claims and counterclaims.

References

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ABC News. (2015) China-Australia Free Trade Agreement: Pros and cons, [online]. Available at: https://www.abc.net.au/news/2015-06-17/china-australia-free-trade-agreement-pros-and-cons/6553680[Accessed on 2 October 2017]

Australian Trade and Investment Commission (2015). China-Australia Free Trade Agreement, 2015, [online]. Available at: [Accessed on 2 October 2017]

Bank of India v Gobindram Naraindas Sadhwani (1988)

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