China-Australia FTA to bring zero tariffs for Australian coal in China

According to the free trade agreement (FTA) officially signed by China and Australia on June 17, China's import tariff on Australian coking coal will be cut from three percent to zero, which will improve the competitiveness of Australia's coking coal in the Chinese market. Meanwhile, China's import tariff on Australian thermal coal will initially be reduced from six percent to four percent, will be cut further in 2016, and will finally be reduced to zero in 2017.
 
Based on statistics data from Chinese customs, in the January-April period this year China imported 22.56 million mt of coal from Australia, accounting for 32.7 percent of China's total coal import volume in the given period. In particular, the coking coal and thermal coal volumes imported from Australia in this period amounted to 7.04 million mt and 14.81 million mt, accounting for 48 percent and 50 percent of the total import volumes of the respective products, with Australia being China's largest source of imports of coking coal and thermal coal.
 
With the implementation of zero tariffs for Australian coal, coal from Australia will become more competitive in China, with domestic coal producers likely to be negatively impacted.