A leading employer group has warned that the China Australia Free Trade Agreement could ruin Australia’s fibre packaging industry, which makes cardboard packaging and corrugated boxes.
Innes Willox, CEO of Australian Industry Group (Ai), the main employer body for the manufacturing sector, told the federal Joint Standing Committee on Treaties that the trade deal could see the local industry facing almost $1 billion of Chinese imports over the next four years.
Australian companies could start to make the strategic decision to move manufacturing to China, as this is the business model currently being rewarded under ChAFTA, he said.
In a written submission, Willox told the federal committee he had ‘significant concerns’ with the imbalance of tariff reductions under ChAFTA:
One entire industry, the Australian Fibre Packaging Industry, expects to face a significant increase in competition from Chinese competitors selling to Australia at zero tariffs from day one, while it has no scheduled tariff rate reduction for selling its product into China under the current terms of ChAFTA. Australia has a globally competitive packaging industry that currently exports to the world, including China, and it is already facing significant pressure from imports.
According to a report released by IndustryEdge, Australian imports of pre-converted corrugated boxes have grown at an average rate of 10.6 per cent per annum for the past ten years. Chinese imports have dominated the market for more than a decade, in both volume and market share, according to the same report. In 2014-15, annual imports from China were 20.9kt, making up 69 per cent of total imports. China/Hong Kong has been the source of 82 per cent of the increase in total imports in the last decade. Using the lost tariff revenue data provided by the Parliamentary Budget Office, we estimate that the local industry can expect to face almost $1billion of Chinese imports over the next four years.
Given these statistics it is difficult to understand why our negotiators accepted such an unbalanced deal. With the anticipated lost tariff revenue we are effectively providing the Chinese Packaging industry with a $58 million subsidy over the next four years. The Pulp, Paper and Converted Paper Product Manufacturing industry employs 14,900 Australians, and supports many more jobs in its supply chain. Based on the ChAFTA outcome, Australian companies could start to make the strategic decision to move manufacturing to China, as this is the business model currently being rewarded under ChAFTA.
ChAFTA is now before parliament’s Joint Standing Committee on Treaties for review.