Australia and China will formally sign the long-deadlocked free trade agreement in Canberra on Wednesday just as new modelling shows the three North Asian trade deals struck in principle by Prime Minister Tony Abbott in 2014 (Japan, Korea, China) will be a boon for jobs and growth in Australia in coming decades.
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Trade Minister Andrew Robb, who has missed Parliament in recent days due to ill-health, hopes to attend the ceremony along with his Chinese counterpart.
The modelling work by the Centre for International Economics looked at the combined impact on business sectors and the Australian economy from the expanded trade under agreements with Tokyo, Seoul, and Beijing.
It found Australian jobs would grow by 9000 per year to be 178,000 higher in 2035 and that the export of goods to the three North Asian economic giants will grow by 11.7 per cent to be nearly $17 billion larger in 20 years time than would otherwise be the case.
Services, which Mr Robb has argued offer the greatest growth potential for future Australian exports into the region, are expected to grow by 13.9 per cent to be around $2.2 billion larger in 2035 than they would have been, although the government is even more optimistic.
All up, according to the modelling, Australia's economy is projected to be $24.4 billion larger measured in today's dollars with cheaper Asian goods in Australia also turbocharging domestic consumption.
Mr Robb hinted that the modelling was conservative saying it had not attempted to capture "the long-term confidence effects of closer relations associated with the investment changes" in the FTAs.
"In 10 years since the conclusion of the Australia-US Free Trade Agreement, for example, two-way investment has grown from $642 billion in 2004 to more than $1.3 trillion in 2014 and these flows have certainly not been all one way," he said.
"The US is Australia's major investment destination abroad with total investment of $575.5 billion in 2014.
Mr Robb, who worked tirelessly last year to land the Chinese deal, which had become stalled under the previous government, struck an ebullient tone declaring "the modelling confirmed the substantial economic gains that will flow to Australia in the years and decades ahead as a result of this powerful trifecta of trade agreements".
"These agreements have locked in our existing trade relations with the major economies of North Asia and will be the catalyst for further growth across goods, services and investment."
In 2004 the Centre for International Economics conducted a study for the Australian government that found the benefits of the proposed Australia-US free trade agreement would climb to $6 billion per year after a decade. The prediction was disputed by Australian University economist Ross Garnaut who said it didn't pass the "laugh test".
An Australian National University study on the tenth anniversary of the agreement found it had provided no boost to either the US or Australian economies and had left each slightly worse off than it would have been without the deal.
The government says that under the deal more than 85 per cent of Australia's goods exports to China will enter that country carrying no cost penalty when the "ChAFTA" begins, and this will rise to 93 per cent after four years and 95 per cent when agreement is fully operational.
The deal will see dairy tariffs of up to 20 per cent eliminated within four to 11 years, and beef tariffs of 12 to 25 per cent scaled down to nothing over nine years.
Wine tariffs of up to 20 per cent will also go within four years which, given the soaring thirst of China's swelling middle-class, could single-handedly buoy an industry struggling against the gathering competition.
With Peter Martin
