15 September 2015

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On 14 September 2015 the Australian Liberal Party voted to remove the Hon Tony Abbott as leader of the Australian Liberal Party and to replace him with the Hon Malcolm Turnbull. As a result, Malcolm Turnbull will today become the new Prime Minister of Australia.

There has been considerable commentary on the differences between Malcolm Turnbull and Tony Abbott in political ideologies, with Turnbull being viewed as more progressive, big business focused and more embracing of technological and scientific change.

One opinion that Malcolm Turnbull and Tony Abbott share is the importance of Australia’s trade and investment relationship with China. The new Prime Minister elect is a strong supporter of the new China Australia Free Trade Agreement (“ChAFTA”).

In this China Messenger, Moulis Legal’s Christopher Hewitt and Charles Zhan discuss Prime Minister elect Turnbull’s likely attitudes on trade and investment between China and Australia.

The new PM recognises China’s importance to Australia’s economy

Malcolm Turnbull has indicated that his focus as Prime Minister will be on stimulating the Australian economy and achieving much-needed economic growth. He sees trade and investment between China and Australia as a critical part of his future economic plan for Australia.

In September last year Malcolm Turnbull stated:

China is our largest export market, accounting for 36 per cent of Australia’s exports in 2013.  Iron ore accounted for 55 per cent of those exports by value, while services – mainly in tourism – accounted for around 7 per cent of exports.  Chinese investment in Australia is similarly weighted towards resources.  In the six years to 2012, 79 per cent of inbound Chinese investment was in mining, a further 12 per cent was in oil and gas.1

In August he made similar comments regarding the importance of trade and investment in services between Australia and China:

China is already the largest single market for Australia’s service exports … China is our largest source of international students (about 29% of the total) and is our largest source of tourism expenditure (18% of the total).2

Turnbull’s position on the China Australia Free Trade Agreement

Former Prime Minister Tony Abbott was committed to the completion and implementation of the broad free trade agreement between China and Australia. Available evidence indicates that the new Prime Minister will be just as supportive of ChAFTA.

Mr Turnbull recently stated:

The ChAFTA lays a historic foundation for the next phase of Australia’s economic relationship with China. Most significantly, the unprecedented market access China has offered to Australia under ChAFTA puts our firms at a significant competitive advantage.3

What are the likely outcomes?

There has been strong business support for ChAFTA, but at the same time labour unions have opposed the reforms that would further liberalise the movement of Chinese workers into Australia to work on local projects, despite the similar treatment afforded under other free trade agreements Australia has entered into.

Charles Zhan from Moulis Legal observes:

Up to now the living standards of both countries have accelerated as a result of the complementarity of our two economies and the better cultural understandings that our trade has enabled. ChAFTA is a very significant trade proposal and each side – China and Australia – face political challenges in finalising this new trade deal. Competitive, industrial and investment change is inevitable.  Hopefully the leadership change will help to cut through the often biased distractions surrounding ChAFTA that have emerged in recent weeks.

In July at the Australia China Business Council’s 2015 Export Forum, Moulis Legal’s principal partner Daniel Moulis reflected on the significant results that ChAFTA will achieve in terms of reduced tariff rates, better services access, and the liberalisation of the movement of workers between the two countries.

ChAFTA is currently being reviewed by the Australian Parliament’s Joint Standing Committee on Treaties. The Committee expects to table its report in Parliament in mid-October, following which a vote will be held to decide on ratification.

Passage of ChAFTA without amendment is not certain, however there is nothing in Malcolm Turnbull’s pronouncements on the subject that suggest any flagging in the Liberal/National Party government’s continued resolve for ChAFTA’s early approval and implementation.

Moulis Legal is active in helping both Australian and Chinese companies in their trade and investment between the two countries. For more information, please contact Daniel Moulis or Charles Zhan in our Canberra office on +61 2 6163 1000 ( and or Christopher Hewitt in our Brisbane office on +61 7 3367 6900 (

This memo presents an overview and commentary of the subject matter. It is not provided in the context of a solicitor-client relationship and no duty of care is assumed or accepted. It does not constitute legal advice.

© Moulis Legal 2015